History of Taxation in India: CA Mohit Punetha

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HISTORY OF TAXATION IN INDIA
There are two types of tax in India i.e. direct and indirect. Taxation in India is rooted from the period of Manu
Smriti and Arthasastra. Present Indian tax system is based on this ancient tax system which was based on the theory
of maximum social welfare.
In India, the system of direct taxation as it is known today has been in force in one form or another even from
ancient times. Variety of tax measures are referred in both Manu Smriti and Arthasastra.
According to Manu Smriti, the king should arrange the collection of taxes in such a manner that the tax payer did
not feel the pinch of paying taxes. He laid down that traders and artisans should pay 1/5th of their profits in silver
and gold, while the agriculturists were to pay 1/6th, 1/8th and 1/10th of their produce depending upon their
circumstances.
Kautilya has also described in great detail the system of tax administration in the Mauryan Empire. It is remarkable
that the present day tax system is in many ways similar to the system of taxation in vogue about 2300 years ago.
In India, this tax was introduced for the first time in 1860, by Sir James Wilson in order to meet the losses sustained
by the Government on account of the Military Mutiny of 1857. In 1918, a new income tax was passed and again it
was replaced by another new act which was passed in 1922.This Act remained in force up to the assessment year
1961-62 with numerous amendments.
In consultation with the Ministry of Law finally the Income Tax Act, 1961 was passed. The Income Tax Act 1961
has been brought into force with 1 April 1962. It applies to the whole of India and Sikkim (including Jammu and
Kashmir).
Since 1962 several amendments of far-reaching nature have been made in the Income Tax Act by the Union Budget
every year.
Difference between Direct tax and Indirect tax
The fundamental categorization of taxes is premised upon who collects the taxes from taxpayers. An overview
of direct tax and indirect tax difference is given below –
Context of differentiation Direct tax Indirect tax
An indirect tax is levied on goods and

It is levied on the income or profit of a
Imposition of tax services rather than on income or
taxpayer.
profits.
Taxpayers pay it directly to the Taxpayers pay it to the government

Course of payment
government. through an intermediary.
Paying entity Individuals and businesses End-consumers
Rate of tax payment Based on income and profits Same for all taxpayers
Transferability of payment Cannot be transferred. Transferable
Progressive tax, i.e., its rate increases with Regressive tax, i.e., its rate decreases
Nature of tax
taxpayer’s income. with increase in income.
Advantages of GST
1. GST eliminates the cascading effect of tax

GST is a comprehensive indirect tax that was designed to bring indirect taxation under one umbrella. More
importantly, it is going to eliminate the cascading effect of tax that was evident earlier.
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Cascading tax effect can be best described as ‘Tax on Tax’. Let us take this example to understand what is Tax on
Tax:
Before GST regime

A consultant offering services for say, Rs 50,000 and charged a service tax of 15% (Rs 50,000 * 15% = Rs 7,500).
Then say, he would buy office supplies for Rs. 20,000 paying 5% as VAT (Rs 20,000 *5% = Rs 1,000).
He had to pay Rs 7,500 output service tax without getting any deduction of Rs 1,000 VAT already paid on
stationery.
His total outflow is Rs 8,500.
Under GST
GST on service of Rs 50,000 @18% 9,000
Less: GST on office supplies (Rs 20,000 @ 5%) 1,000
Net GST to pay 8,000
2. Higher threshold for registration

Earlier, in the VAT structure, any business with a turnover of more than Rs 5 lakh (in most states) was liable to pay
VAT. Please note that this limit differed state-wise. Also, service tax was exempted for service providers with a
turnover of less than Rs 10 lakh.
Under GST regime, however, this threshold has been increased to Rs 20/40 lakh, which exempts many small
traders and service providers.
Tax Threshold Limits

Excise 1.5 crores
VAT 5 lakhs in most states
Service Tax 10 lakhs
GST 20 / 40 lakhs (10 lakhs for NE states)
3. Composition scheme for small businesses

Under GST, small businesses (with a turnover of Rs 20 to 1.5 crores) can benefit as it gives an option to lower
taxes by utilizing the composition scheme. This move has brought down the tax and compliance burden on many
small businesses.
4. Simple and easy online procedure

The entire process of GST (from registration to filing returns) is made online, and it is super simple. This has been
beneficial for start-ups especially, as they do not have to run from pillar to post to get different registrations such
as VAT, excise, and service tax.
5. The number of compliances is lesser

Earlier, there was Excise, VAT and service tax, each of which had its own returns and compliances.
Under GST, however, there are just few unified returns (GSTR-1, 3B) to be filed for normal taxpayer’s however
GSTR-4 yearly to be filled by composition dealer. Therefore, the number of returns to be filed has come down.
5. Defined treatment for E-commerce operators

Earlier to the GST regime, supplying goods through the e-commerce sector was not defined. It had variable VAT
laws. Let us look at this example:
Online websites (like Flipkart and Amazon) delivering to Uttar Pradesh had to file a VAT declaration and mention
the registration number of the delivery truck. Tax authorities could sometimes seize goods if the documents were
not produced.
Again, these e-commerce brands were treated as facilitators or mediators by states like Kerala, Rajasthan, and
West Bengal which did not require them to register for VAT.
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All these differential treatments and confusing compliances have been removed under GST. For the first time, GST
has clearly mapped out the provisions applicable to the e-commerce sector and since these are applicable all over
India, there should be no complication regarding the inter-state movement of goods anymore.
6. Improved efficiency of logistics

Earlier, the logistics industry in India had to maintain multiple warehouses across states to avoid the current CST
and state entry taxes on inter-state movement. These warehouses were forced to operate below their capacity,
giving room for increased operating costs.
Under GST, however, these restrictions on inter-state movement of goods have been lessened.
As an outcome of GST, warehouse operators and e-commerce aggregators players have shown interest in setting
up their warehouses at strategic locations such as Nagpur (which is the zero-mile city of India), instead of every
other city on their delivery route. Reduction in unnecessary logistics costs is already increasing profits for
businesses involved in the supply of goods through transportation.
7. Unorganized sector is regulated under GST

In the pre-GST era, it was often seen that certain industries in India like construction and textile were largely
unregulated and unorganized.
Under GST, however, there are provisions for online compliances and payments, and for availing of input credit
only when the supplier has accepted the amount. This has brought in accountability and regulation to these
industries.
Disadvantages of GST
1. Increased costs due to software purchase

Businesses have to either update their existing accounting or ERP software to GST-compliant one or buy GST
software so that they can keep their business going. But both the options lead to the increased cost of software
purchase and training of employees for efficient utilization of the new billing software.
2. Not being GST-compliant can attract penalties

Small and medium-sized enterprises (SME) may still not be able to grasp the provisions of the GST tax regime.
They will have to issue GST-complaint invoices, be compliant with digital record-keeping, and of course, file timely
returns. This means that the GST-complaint invoice issued must have mandatory details such as GSTIN, place of
supply, HSN codes, and others.
3. GST will mean an increase in operational costs

As we have already established that GST is changing the way how tax is paid, businesses will now have to employ
tax professionals to be GST-complaint. This will gradually increase costs for small businesses as they will have to
bear the additional cost of hiring experts.
Also, businesses will need to train their employees in GST compliance, further increasing their overhead expenses.
4. GST came into effect in the middle of the financial year

As GST was implemented on the 1st of July 2017, businesses followed the old tax structure for the first 3 months
(April, May, and June), and GST for the rest of the financial year.
Businesses may find it hard to get adjusted to the new tax regime, and some of them are running these tax
systems parallelly, resulting in confusion and compliance issues.
5. Adapting to a complete online taxation system

Unlike earlier, businesses are now switching from pen and paper invoicing to system based invoicing and filing to
online return filing and making payments. This might be tough for some smaller businesses to adapt to.
6. SMEs will have a higher tax burden
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Smaller businesses, especially in the manufacturing sector will face difficulties under GST. Earlier, only businesses
whose turnover exceeded Rs 1.5 crore had to pay excise duty. But now any business whose turnover exceeds Rs
20 / 40 lakh will have to pay GST.
However, SMEs with a turnover uptoRs1.5 Crores (75 Lakhs for special categories states) can opt for the
composition scheme and pay only 1% tax on turnover in lieu of GST and enjoy lesser compliances. The catch
though is these businesses will then not be able to claim any input tax credit. The decision to choose between
higher taxes or the composition scheme (and thereby no ITC) will be a tough one for many SMEs.
History of GST
In 2000, the Prime Minister (Atal Bihari Vajpayee) mooted the concept of GST and set up a committee(called
kelker committee) to design a Goods and Services Tax (GST) model for the country.
In 2003, the Central Government formed a task force on Fiscal Responsibility and Budget Management.
In 2004strongly recommended fully integrated ‘GST’ on national basis.
In 2006, the then Union Finance Minister, Shri P. Chidambaram, while presenting the Union Budget (2006-2007),
announced that GST would be introduced from April 1, 2010. Since then, GST missed several deadlines and
continued to be shrouded by the clouds of uncertainty.
In 2014, the talks of ushering in GST, however, gained momentum when the NDA Government tabled the
Constitution (122nd Amendment) Bill, 2014 on GST in the Parliament on 19th December, 2014.
In 2015 and 2016, The Lok Sabha passed the Bill on 6th May, 2015 and Rajya Sabha on 3rd August, 2016.
Subsequent to ratification of the Bill by more than 50% of the States, Constitution (122nd Amendment) Bill, 2014
received the assent of the President on 8th September, 2016 and became the Constitution (101st Amendment) Act,
2016, which paved the way for introduction of GST in India.
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In year 2017, on 27th March, 2017, the Central GST legislations - Central Goods and Services Tax Bill, 2017,
Integrated Goods and Services Tax Bill, 2017, Union Territory Goods and Services Tax Bill, 2017 and Goods and
Services Tax (Compensation to States) Bill, 2017 were introduced in Lok Sabha. Lok Sabha passed these bills on
29th March, 2017 and with the receipt of the President’s assent on 12th April, 2017, the Bills were enacted. The
enactment of the Central Acts was followed by the enactment of the State GST laws by various State Legislatures.
Telangana, Rajasthan, Chhattisgarh, Punjab, Goa and Bihar were among the first ones to pass their respective State
GST laws. By 30th June, 2017, all States and Union Territories had passed their respective SGST and UTGST Acts
except Jammu and Kashmir. With effect from 1st July, 2017, the historic indirect tax reform – GST was introduced
GST law was extended to Jammu and Kashmir on 8th July, 2017.
GST is a path breaking indirect tax reform which attempts to create a common national market. GST has subsumed
multiple indirect taxes like excise duty, service tax, VAT, CST, luxury tax, entertainment tax, entry tax, etc. VAT
and GST are often used inter-changeably as the latter denotes comprehensiveness of VAT by coverage of goods
and services. France was the first country to implement VAT/GST in 1954. Presently, more than 160 countries
have implemented VAT/GST in some form or the other because this tax has the capacity to raise revenue in the
most transparent and neutral manner. Most of the countries follow unified GST i.e., a single tax applicable
throughout the country. However, in federal polities like Brazil and Canada, a dual GST system is prevalent. Under
dual system, GST is levied by both the federal and the State Governments. India has adopted dual GST model
because of its unique federal nature.
Introduction of GST in India
India established a dual GST structure in 2017, which was the biggest reform in the country's tax structure in
decades. The main objective of incorporating the GST was to eliminate tax on tax, or doubletaxation, which
cascades from the manufacturing level to the consumption level.
Taxes Subsumed under GST
At the Central level, the following taxes are being subsumed:

1. Central Excise Duty,
2. Additional Excise Duty,
3. Service Tax,
4. Additional Customs Duty commonly known as Countervailing Duty, and
5. Special Additional Duty of Customs.
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At the State level, the following taxes are being subsumed:

1. Subsuming of State Value Added Tax/Sales Tax,
2. Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and
collected by the States),
3. Octroi and Entry tax,
4. Purchase Tax,
5. Luxury tax, and
6. Taxes on lottery, betting and gambling.
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FEATURES OF GST
• The goods and services tax (GST) is a tax on goods and services sold domestically for consumption.
• The tax is included in the final price and paid by consumers at point of sale and passed to the government
by the seller.
• The GST is a common tax used by the majority of countries globally.
• The GST is usually taxed as a single rate across a nation.
The goods and services tax (GST) is an indirect tax that is applicable on supply of goods and services. The business
adds the GST to the price of the product, and a customer who buys the product pays the sales price inclusive of the
GST. The GST portion is collected by the business or seller and forwarded to the government.
Most countries with a GST have a single unified GST system, which means that a single tax rate is applied
throughout the country. A country with a unified GST platform merges central taxes (e.g., sales tax, excise duty
tax, and service tax) with state-level taxes (e.g., entertainment tax, entry tax, transfer tax, sin tax, and luxury tax)
and collects them as one single tax. These countries tax virtually everything at a single rate.
Only a handful of countries, such as Canada and Brazil, have a dual GST structure. Compared to a unified GST
economy where tax is collected by the federal government and then distributed to the states, in a dual system, the
federal GST is applied in addition to the state sales tax.
France was the first country to implement the GST in 1954; since then, an estimated 160 countries have adopted
this tax system in some form or another. Some of the countries with a GST include Canada, Vietnam, Australia,
Singapore, United Kingdom, Monaco, Spain, Italy, Nigeria, Brazil, South Korea, and India.
Dual GST model

India is a federal country where both the Centre and the States have been assigned the powersto levy and collect
taxes through appropriate legislation. Both the levels of Government have distinct responsibilities to perform
according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual
GST, therefore, was adopted tokeep with the Constitutional requirement of fiscal federalism.
● State GST-Collected by the State Government CGST

● Central GST -Collected by the Central Government IGST
● Integrated GST- Collected by the Central Government on inter-state supply of Goods and Services
Central Goods and Services Tax Act, 2017 (CGST): CGST levied and collected by Central Government. It is a
revenue source to the Central Government of India, on intra-state supplies of taxable goods or services or both.
State Goods and Services Tax Act, 2017 (SGST): SGST levied and collected by State Governments/Union
Territories with State Legislatures (namely Delhi, J&K and Pondicherry) on intra-state supplies of taxable goods
or services or both. It is a revenue source of the respective State Government.
Union Territory Goods and Services Tax (UTGST):UTGST levied and collected by Union Territories without State
Legislatures, on intra-state supplies of taxable goods or services or both.
Note: India is a Union of States. The territory of India comprises of the territories of the States and the Union
territories. Currently, there are 28 States and 8 Union territories; of which, three (Delhi, Pondicherry and
Jammu & Kashmir) are having Legislature.
GST – in Union Territories without Legislature:

Supplies within such Union territory, Central GST will apply to whole of India and hence, it would be
applicable to all Union Territories, with or without Legislature. To replicate the law similar to State GST to
Union Territories without Legislature, the Parliament has the powers under Article 246Ato make such laws.
Alternatively, the President of India may use his general powers to formulate such laws. Hence, law sameas similar
to State GST can be formulated for Union Territory without Legislature, by the Parliament.
The following are Union Territories without Legislature:

1. Lakshadweep
2. Daman and Diu and Dadra and Nagar Haveli
3. Andaman and Nicobar Islands
4. Ladakh
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5. Chandigarh
Revenue sharing methodology of GST
Suppose that goods worth 10,000 are sold by manufacturer Afrom Maharashtra to Dealer B in Maharashtra. Dealer
B resells them to Trader C in Rajasthan for 17,500.
Suppose the applicable tax rates for the goods sold are CGST= 9%, SGST=9%, and IGST=9+9=18%.
Since A is selling this to B in Maharashtra itself, it is an intra-state sale and so, CGST@9% and SGST@9% will
apply.
Dealer B (Maharashtra) is selling to Trader C (Rajasthan). Hence, this is an interstate sale, with IGST@18%.
Trader C (Rajasthan) is selling to end user D also in Rajasthan. Once again, it is an intra-state sale and hence,
CGST@9% and SGST@9% will apply.
GST being a consumption-based tax the state where the goods were consumed (Rajasthan) will receive GST.
By that logic, Maharashtra (where goods were sold) should not get any taxes. State Rajasthan and Central
Government should have got (30,000*9%) =2,700 each. Thus, Maharashtra (exporting state) will have to transfer
credit of SGST of 900 (used in payment of IGST) to the Centre.
Any IGST credit will first be applied to set off in this order: First set off against IGST liability, then CGST
and the balance credit will be used to set off SGST. In turn, Central Government will transfer to state Rajasthan
(importing state) 450 IGST.
GST Network
• It is a not for profit, non-Government, private limited company incorporated in 2013.

• The Government of India holds 24.5%equity in GSTN
• All States including NCT of Delhi and Pondicherry, and the Empowered Committee of State
Finance Ministers (EC), together hold another 24.5%.
• Balance 51% equity is with non-Government financial institutions
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• The Company has been set up primarily to provide IT infrastructure and services to the Central
and State Governments, tax payers and other stakeholders for implementation of the Goods and
Services Tax (GST).
• After rolling out of GST, the Revenue Model of GSTN shall consist of User Charge to be paid by
stakeholders who will use the system and thus it will be a self-sustaining organization(Mean’s user
charges will be paid entirely by the Central Government and the State Governments in equal
proportion (i.e. 50:50) on behalf of all users. The state share will be then apportioned to individual
states, in proportion to the number of taxpayers in the state.)
New Changes:
• GST Council has approved proposal to converts Network (GSTN) into government entityfrom
current private entity status by taking over stakes held by private entities.
• Why this change?
• Majority of Goods and Services Tax (GST) processes including registration, filing of
returns, payment of taxes, processing of refunds is IT driven and mainly through
GSTN.
• For this, GSTN handles large-scale invoice level data of lakhs of business entities
including data relating to exports and imports.(mean’s important confidential
information of Lakhs of business entities are in the hands of these private entities,
which may leads to leakage of confidential data of such business entities)
• Considering nature of state function performed by GSTN, it was felt that the network
should be converted into fully government-owned company.
Summary of whole chapter
1. Ancient history of tax structure in Manu Smriti and Arthasastra

2. Difference between Direct tax and Indirect tax
3. Advantages of GST
4. Disadvantages of GST
5. History of GST
6. Introduction of GST in India
7. Taxes Subsumed Under GST
8. Features of GST
9. Revenue sharing methodology of GST
10. GST Network
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The Constitution (One Hundred and First Amendment) Act, 2016
[8th September, 2016.]
An Act further to amend the Constitution of India.
Section 1
(1) This Act may be called the Constitution (One Hundred and First Amendment) Act, 2016.
(2) It shall come into forceon such date as the Central Government may, by notification in the Official Gazette,
appoint, and different dates may be appointed for different provisions of this Act and any reference in any such
provision to the commencement of this Act shall be construed as a reference to the commencement of that
provision.
Section 2
After article 246 of the Constitution, the following article shall be inserted, namely:—
"246A. (1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the
Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union
or by such State.
This Article 246A, inserted in constitution to give power to parliament to levy CGST in intra-state supply by
centre and to levy SGST in intra-state supply by States.
(2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods,
or of services, or both takes place in the course of inter-State trade or commerce.
This Article 246A (2), inserted in constitution to give power to parliament to levy IGST in all inter-state
supply.
Explanation.—The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of
article 279A, take effect from the date recommended by the Goods and Services Tax Council.''.
Section 3
In article 248 of the Constitution, in clause (1), for the word "Parliament", the
words, figures and letter "Subject to article 246A, Parliament" shall be substituted.
Article 248. Residuary powers of legislation
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(1) Parliament has exclusive power to make any law with respect to any matter not covered in the Concurrent
List or State List
(2) Such power shall include the power of making any law imposing a tax not mentioned in either of those
Lists.
Because in GST, states not want to allow all power to centre, so this Article 248 need amendment and written
“subject to Article 248” so that exclusive power is not held with parliament only.
Section 4
In article 249 of the Constitution, in clause (1), after the words "with respect to",the and letter "goods and services
tax provided under article 246A or" shall be inserted.
Article 249, deals with Power of Parliament to legislate with respect to a matter in the State List in the
national interest and voting required for any resolutions by the states.
Section 5
In article 250 of the Constitution, in clause (1), after the words "with respect to",
the figures and letter "goods and services tax provided under article 246A or" shall be inserted.
Article 250, deals with the Power of Parliament to legislate with respect toany matter in the State List if a
Proclamation of Emergency is in operation.
Section 6
In article 268 of the Constitution, in clause (1),“Medicinal and toilet preparations" shall be omitted.
This excluded from the Union List, so that GST can be levied into such goods.
Section 7
Article 268A of the Constitution, as inserted by section 2 of the Constitution(Eighty-eighth Amendment) Act, 2003
shall be omitted.
This Article deals with Service Tax, need to omit after GST implementation
Section 8 (Not relevant)
In article 269 of the Constitution, in clause (1), after the words "consignment of goods",
Section 9.(Most important)
''269A. (1) Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and
collected by the Government of India and such tax shall be apportioned between the Union and the States in the
manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.
Explanation.—For the purposes of this clause, supply of goods, or of services, or both in the course of import into
the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade
or commerce.
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(2) The amount apportioned to a State under clause (1) shall not form part of the Consolidated Fund of India.
IGST apportioned to states not form part of the Consolidated Fund of India.
(3) Where an amount collected as tax levied under clause (1) has been used for payment of the taxlevied by a State
under article 246A, such amount shall not form part of the Consolidated Fund of India.
IGST utilised with SGST also not form part of the Consolidated Fund of India.
(4) Where an amount collected as tax levied by a State under article 246A has been used for payment of the tax
levied under clause (1), such amount shall not form part of the Consolidated Fund of the State
SGST utilised with IGST also not form part of the Consolidated Fund of India.
(5) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of
goods, or of services, or both takes place in the course of inter-State trade or commerce.''.
Section 10
In article 270 of the Constitution,
(i) in clause (1), for the words, figures and letter "articles 268, 268A and 269", the words, figures and letter "articles
268, 269 and 269A" shall be substituted;
(ii) after clause (1), the following clauses shall be inserted, namely:—
''(1A) The tax collected by the Union under clause (1) of article 246A(CGST collected by CG) shall also be
distributed between the Union and the States in the manner provided in clause (2).
'(1B) The tax levied and collected by the Union under clause (2) of article 246A and article 269A (IGST collected
by CG), which has been used for payment of the tax levied by the Union under clause (1) of article 246A, and the
amount apportioned to the Union under clause (1) of article 269A, shall also be distributed between the Union and
the States in the manner provided in clause (2).''
Section 11
In article 271 of the Constitution, after the words ''in those articles'', the words, figures and letter
''except the goods and services tax under article 246A,'' shall be inserted.
Article 271 deals with the surcharge, which will levy by the union without interrupting GST, as and when
required.
Section 12
''279A. (1) The President shall, within sixty days from the date of commencement of the Constitution (One
Hundred and First Amendment) Act, 2016, by order, constitute a Council to be called the Goods and Services Tax
Council(Constituted on 12th September 2016).
(2) The Goods and Services Tax Council shall consist of the following members, namely:—
the Union Finance Minister........................ Chairperson;
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the Union Minister of State in charge of Revenue or Finance.................
the Minister in charge of Finance or Taxation or any other Minister nominated by each State
Government....................Members.
(3) The Members of the Goods and Services Tax Council referred to in sub-clause (c) of clause (2) shall, as soon as
may be, choose one amongst themselves to be the Vice-Chairperson of the Council for such period as they may
decide.
(4) The Goods and Services Tax Council shall make recommendations to the Union and the States on—
thetaxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the
goods and services tax;
the goods and services that may be subjected to, or exempted from the goods and services tax;
model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on
supplies in the course of inter-State trade or commerce under article 269A and the principles that govern the place
of supply;
the threshold limit of turnover below which goods and services may be exempted from goods and services tax;
the rates including floor rates with bands of goods and services tax;
any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster;
special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
any other matter relating to the goods and services tax, as the Council may decide.
(5) The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied
on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine
fuel.
(6) While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided
by the need for a harmonised structure of goods and services tax and for the development of a harmonised national
market for goods and services.
(7) One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at
its meetings.
(8) The Goods and Services Tax Council shall determine the procedure in the performance of its functions.
(9) Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less
than three-fourths of the weighted votes of the members present and voting, in accordance with the following
principles, namely:—
the vote of the Central Government shall have a weightage of onethird of the total votes cast, and
the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast,
in that meeting.
(10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of—
any vacancy in, or any defect in, the constitution of the Council; or
any defect in the appointment of a person as a Member of the Council; or
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any procedural irregularity of the Council not affecting the merits of the case
(11)The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute —
between the Government of India and one or more States; or
between the Government of India and any State or States on one side and one or more other States on the other
side; or
between two or more States,
arising out of the recommendations of the Council or implementation thereof.''.
Section 13
In article 286 of the Constitution,—
(i) in clause (1),—
(A) for the words "the sale or purchase of goods where such sale or purchase takes place", the words "the supply of
goods or of services or both, where such supply takes place" shall be substituted;
(B) in sub-clause (b), for the word "goods", at both the places where it occurs, the words "goods or services or
both" shall be substituted;
(ii) in clause (2), for the words "sale or purchase of goods takes place", the words "supply of goods or of services or
both" shall be substituted;
(iii) clause (3) shall be omitted.
Section 14
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In article 366 of the Constitution,—
(i) after clause (12), the following clause shall be inserted, namely:—
'(12A) "goods and services tax" means any tax on supply of goods, or services or bothexcept taxes on the supply of
the alcoholic liquor for human consumption;';
(ii) after clause (26), the following clauses shall be inserted, namely:—
'(26A) "Services" means anything other than goods;
(26B) "State" with reference to articles 246A, 268, 269, 269A and article
279A includes a Union territory with Legislature;'.
Section 15
In article 368 of the Constitution, in clause (2), in the proviso, in clause (a), for the words and
figures "article 162 or article 241", the words, figures and letter "article 162, article 241 or article 279A" shall be
substituted.
Article 368 deals with the Power of Parliament to amend the Constitution and procedure.
Section 16 (not too relevant)
In the Sixth Schedule to the Constitution, in paragraph 8, in sub-paragraph (3),—
(i) in clause (c), the word "and" occurring at the end shall be omitted;
(ii) in clause (d), the word "and" shall be inserted at the end;
(iii) after clause (d), the following clause shall be inserted, namely:—
"(e) taxes on entertainment and amusements.".
Section 17
In the Seventh Schedule to the Constitution,—
inList I—Union List,—
(i) for entry 84, the following entry shall be substituted, namely:—
"84. Duties of excise on the following goods manufactured or produced in India, namely:—
petroleum crude;
high speed diesel;

Now, Central excise levy on
motor spirit (commonly known as petrol); these items only, rest cover
under GST
natural gas;
aviation turbine fuel; and
tobacco and tobacco products.";
(ii) Entries 92 and 92C shall be omitted;(Related to service tax)
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In List II—State List,—
(i) entry 52 shall be omitted ;(Entry Tax)
(ii) For entry 54, the following entry shall be substituted, namely :—( State VAT)
"54. Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas,
aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-State
trade or commerce or sale in the course of international trade or commerce of such goods.";(State VAT still levy
on the mentioned goods)
(iii) Entry55 shall be omitted ;(Advertisement Tax)
(iv) for entry 62, the following entry shall be substituted, namely:—
"62. Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality
or a Regional Council or a District Council.".
Section 18
Parliamentshall, by law, on the recommendation of the Goods and Services Tax Council, provide for compensation
to the States for loss of revenue arising on account of implementation of the goods and services tax for a period of
five years.
Section 19 (Not too important)
Notwithstanding anything in this Act, any provision of any law relating to tax on goods or services or on both in
force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of
the Constitution as amended by this Act shall continue to be in force until amended or repealed by a competent
Legislature or other competent authority or until expiration of one year from such commencement, whichever is
earlier
Section 20 (Not too important)
(1) If any difficulty arises in giving effect to the provisions of the Constitution as amended by this Act (including
any difficulty in relation to the transition from the provisions of the Constitution as they stood immediately before
the date of assent of the President to this Act to the provisions of the Constitution as amended by this Act), the
President may, by order, make such provisions, including any adaptation or modification of any provision of the
Constitution as amended by this Act or law, as appear to the President to be necessary or expedient for the purpose
of removing the difficulty:
Provided that no such order shall be made after the expiry of three years from the date of such assent.
(2) Every order made under sub-section (1) shall, as soon as may be after it is made, be laid before each House of
Parliament.
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MINISTRY OF LAW AND JUSTICE
(Legislative Department)
New Delhi
The following Act of Parliament received the assent of the President on the 12th April, 2017, and is hereby
published for general information:—
THE CENTRAL GOODS AND SERVICES TAX ACT, 2017
[12th April, 2017.]
An Act to make a provision for levy and collection of tax on intra-State supply of goods or services or both by the
Central Government and for matters connected therewith or incidental thereto.
BE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:—
CHAPTER I of CGST Act 2017 - PRELIMINARY
Section 1 - Short title, extent and commencement
(1) This Act may be called the Central Goods and Services Tax Act, 2017.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette,
appoint:
Provided that different dates may be appointed for different provisions of this Act and any reference in any such
provision to the commencement of this Act shall be construed as a reference to the coming into force of that
provision.
Section 2 – Definitions
In this Act, unless the context otherwise requires,––
(1) “actionable claim” shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act,
1882;
(2) “address of delivery” means the address of the recipient of goods or services or both indicated on the tax
invoice issued by a registered person for delivery of such goods or services or both;
(3) “address on record” means the address of the recipient as available in the records of the supplier;
(4) “adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this
Act, but does not include the Central Board of Indirect Taxes and Customs, the Revisional Authority, the Authority
for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority, the Appellate Tribunal
and the Authority referred to in sub-section (2) of section 171;
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(5) “agent” means a person, including a factor, broker, commission agent, arhatia, del credereagent, an auctioneer
or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods
or services or both on behalf of another;
(6) “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies
on which tax is payable by a person on reverse charge basis),exempt supplies, exports of goods or services or both
and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis
but excludes central tax, State tax, Union territory tax, integrated tax and cess;
(7) “agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of land—
(a) by own labour, or
(b) by the labour of family, or
(c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal
supervision of any member of the family;
(8) “Appellate Authority” means an authority appointed or authorised to hear appeals as referred to in section 107;
(9) “Appellate Tribunal” means the Goods and Services Tax Appellate Tribunal constituted under section 109;
(10) “appointed day” means the date on which the provisions of this Act shall come into force;
(11) “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment,
provisional assessment, summary assessment and best judgment assessment;
(12) “associated enterprises” shall have the same meaning as assigned to it in section 92A of the Income-tax Act,
1961;
(13) “audit” means the examination of records, returns and other documents maintained or furnished by the
registered person under this Act or the rules made thereunder or under any other law for the time being in force to
verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his
compliance with the provisions of this Act or the rules made thereunder;
(14) “authorised bank” shall mean a bank or a branch of a bank authorised by the Government to collect the tax or
any other amount payable under this Act;
(15) “authorised representative” means the representative as referred to in section 116;
(16) “Board” means the [Central Board of Indirect Taxes and Customs]4 constituted under the Central Boards of
Revenue Act, 1963;
(17) “business” includes(Means this is not the exhaustive list)––
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(a) any trade, commerce, manufacture, profession, vocation(person dedicatedly learning how to trade or render
services),, adventure, wager (who do activities like betting, lottery etc.)or any other similar activity, whether or not it is
for a pecuniary benefit(whether having profit motive or not);
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity
or regularity of such transaction;
(d) Supply or acquisition of goods including capital goods and services in connection with commencement or
closure of business;
(e) Provision by a club, association, society, or any such body (for a subscription or any other consideration) of the
facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the course or
furtherance of his trade, profession or vocation;
(h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed
book maker in such club; and
(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in
which they are engaged as public authorities;
(18) [*****];(definition of business verticals – now deleted)
(19) “capital goods” means goods, the value of which is capitalised in the books of account of the person claiming
the input tax credit and which are used or intended to be used in the course or furtherance of business;
(20) “casual taxable person” means a person who occasionally undertakes transactions involving supply of goods
or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a
State or a Union territory where he has no fixed place of business;
(21) “central tax” means the central goods and services tax levied under section 9;
(22) “cess” shall have the same meaning as assigned to it in the Goods and Services Tax (Compensation to States)
Act;
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(23) “chartered accountant” means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of
the Chartered Accountants Act, 1949;
(24) “Commissioner” means the Commissioner of central tax and includes the Principal Commissioner of central
tax appointed under section 3 and the Commissioner of integrated tax appointed under the Integrated Goods and
Services Tax Act;
(25) “Commissioner in the Board” means the Commissioner referred to in section 168;
(26) “common portal” means the common goods and services tax electronic portal referred to in section 146;
(27) “common working days” in respect of a State or Union territory shall mean such days in succession which are
not declared as gazetted holidays by the Central Government or the concerned State or Union territory
Government,
(28) “company secretary” means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the
Company Secretaries Act, 1980;
(29) “competent authority” means such authority as may be notified by the Government;
(30) “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable
supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in
conjunction with each otherin the ordinary course of business, one of which is a principal supply;
Illustration.— Where goods are packed and transported with insurance, the supply of goods, packing materials,
transport and insurance is a composite supply and supply of goods is a principal supply;
(31) “Consideration” in relation to the supply of goods or services or both includes(Means this is not the exhaustive
list)–
(a) any payment made or to be made, whether in money or otherwise (Mean’s exchange of goods is also
consideration), in respect of, in response to, or for the inducement of, the supply of goods or services or both,
whether by the recipient or by any other person but shall not include any subsidy given by the Central Government
or a State Government;
(b) the monetary value of any act or forbearance(Mean’s value receive for not to do anything is also consideration), ,
in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the
recipient or by any other person but shall not include any subsidy given by the Central Government or a State
Government:
Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as
payment made for such supply unless the supplier applies such deposit as consideration for the said supply(Mean’s
Rent security taken is not treated as consideration unless it is adjusted against their supplies);
(32) “continuous supply of goods” means a supply of goods which is provided, or agreed to be provided,
continuously or on recurrent basis(Like supply of electricity or IGL gas via pipelines) , under a contract, whether or
not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a
regular or periodic basis and includes supply of such goods as the Government may, subject to such conditions, as
it may, by notification, specify;
(33) “continuous supply of services” means a supply of services which is provided, or agreed to be provided,
continuously or on recurrent basis(Like- coaching classes batch of 4 months with payment scheduled) , under a
contract, for a period exceeding three months with periodic payment obligations(Mean’s payment has been already
decided on regular intervals) and includes supply of such services as the Government may, subject to such
conditions, as it may, by notification, specify;
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(34) “conveyance” includes a vessel, an aircraft and a vehicle(Road or rail);
(35) “cost accountant” means a cost accountant as defined in [clause (b)]7 of sub-section (1) of section 2 of the
Cost and Works Accountants Act, 1959;
(36) “Council” means the Goods and Services Tax Council established under article 279A of the Constitution;
(37) “credit note” means a document issued by a registered person under sub-section (1) of section 34;
(38) “debit note” means a document issued by a registered person under sub-section (3) of section 34;
(39) “deemed exports” means such supplies of goods as may be notified under section 147(Here govt on the
recommendation of council notifies some supplies as deemed exports like 100% EOU, Export Promotion capital goods
(EPCG), advance authorization scheme (AA);
(40) “designated authority” means such authority as may be notified by the Board;
(41) “document” includes written or printed record of any sort and electronic record as defined in clause (t) of
section 2 of the Information Technology Act, 2000;
(42) “drawback” in relation to any goods manufactured in India and exported, means the rebate of duty, tax or cess
chargeable on any imported inputs or on any domestic inputs or input services used in the manufacture of such
goods;
(43) “electronic cash ledger” means the electronic cash ledger referred to in sub- section (1) of section 49;
(44) “electronic commerce” means the supply of goods or services or both, including digital products over digital
or electronic network;
(45) “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility
or platform for electronic commerce;
(46) “electronic credit ledger” means the electronic credit ledger referred to in sub-section (2) of section 49;
(47) “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be
wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and
includes non-taxable supply(5 petroleum products + schedule III items); (Mean’s total 3 categories covered under
exempted supplies);
(48) “existing law” means any law, notification, order, rule or regulation relating to levy and collection of duty or
tax on goods or services or both passed or made before the commencement of this Act by Parliament or any
Authority or person having the power to make such law, notification, order, rule or regulation;
(49) “family” means,––
(i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly dependent on the said
person;
(50) “fixed establishment” means a place (other than the registered place of business) which is characterised by a
sufficient degree of permanence and suitable structure in terms of human and technical resources to supply
services, or to receive and use services for its own needs;
(51) “Fund” means the Consumer Welfare Fund established under section 57;
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(52) “goods” means every kind of movable property other than money and securitiesbut includes actionable claim,
growing crops, grass and things attached to or forming part of the land which are agreed to be severed before
supply or under a contract of supply;
(53) “Government” means the Central Government;
(54) “Goods and Services Tax (Compensation to States) Act” means the Goods and Services Tax (Compensation to
States) Act, 2017;
(55) “goods and services tax practitioner” means any person who has been approved under section 48 to act as such
practitioner;
(56) “India” means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed
and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as
referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act,
1976, and the air space above its territory and territorial waters;
(57) “Integrated Goods and Services Tax Act” means the Integrated Goods and Services Tax Act, 2017;
(58) “integrated tax” means the integrated goods and services tax levied under the Integrated Goods and Services
Tax Act;
(59) “input” means any goods other than capital goods used or intended to be used by a supplier in the course or
furtherance of business;
(60) “input service” means any service used or intended to be used by a supplier in the course or furtherance of
business;
(61) “Input Service Distributor” means an office of the supplier of goods or services or both which receives tax
invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the
purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said
services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of
the said office;
(62) “input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory
tax charged on any supply of goods or services or both made to him and includes—
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(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9(supplies received under RCM under
CGST Act 2017);
(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and
Services Tax Act(supplies received under RCM under IGST Act 2017) ;
(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and
Services Tax Act(supplies received under RCM under SGST Act 2017); or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and
Services Tax Act(supplies received under RCM under UTGST Act 2017),
but does not include the tax paid under the composition levy;
(63) “input tax credit” means the credit of input tax;
(64) “intra-State supply of goods” shall have the same meaning as assigned to it in section 8 of the Integrated
Goods and Services Tax Act;
(65) “intra-State supply of services” shall have the same meaning as assigned to it in section 8 of the Integrated
(66) “invoice” or “tax invoice” means the tax invoice referred to in section 31;
(67) “inward supply” in relation to a person, shall mean receipt of goods or services or both whether by purchase,
acquisition or any other means with or without consideration;
(68) “job work” means any treatment or process undertaken by a person on goods belonging to another registered
person and the expression “job worker” shall be construed accordingly;
(69) “local authority” means––
(a) a “Panchayat” as defined in clause (d) of article 243 of the Constitution;
(b) a “Municipality” as defined in clause (e) of article 243P of the Constitution;
(c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or
entrusted by the Central Government or any State Government with the control or management of a municipal or
local fund;
(d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006;
(e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution;
(f) a Development Board constituted under article 371[and article 371J]8 of the Constitution; or
(g) a Regional Council constituted under article 371A of the Constitution;
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(70) “location of the recipient of services” means,—
(a) where a supply is received at a place of business for which the registration has been obtained, the location of
such place of business;
(b) where a supply is received at a place other than the place of business for which registration has been obtained (a
fixed establishment elsewhere), the location of such fixed establishment(Additional place of business);
(c) where a supply is received at more than one establishment, whether the place of business or fixed establishment,
the location of the establishment most directly concerned with the receipt of the supply(3 factory deals from 1 head
office); and
(d) in absence of such places, the location of the usual place of residence of the recipient(Mean’s service received at
home);
(71) “location of the supplier of services” means,—
(a) where a supply is made from a place of business for which the registration has been obtained, the location of
(b) where a supply is made from a place other than the place of business for which registration has been obtained (a
fixed establishment elsewhere), the location of such fixed establishment(Additional place of business);
(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment,
the location of the establishment most directly concerned with the provisions of the supply(3 factory deals from 1
head office);
(d) in absence of such places, the location of the usual place of residence of the supplier(Mean’s service Provided
from home);
(72) “manufacture” means processing of raw material or inputs in any manner that results in emergence of a new
product having a distinct name, character and use and the term “manufacturer” shall be construed accordingly;
(73) “market value” shall mean the full amount which a recipient of a supply is required to pay in order to obtain
the goods or services or both of like kind and quality at or about the same time and at the same commercial level
where the recipient and the supplier are not related;
(74) “mixed supply” means two or more individual supplies of goods or services, or any combination thereof, made
in conjunction with each other by a taxable person for a single price where such supply does not constitute a
composite supply.
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Illustration— A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated
drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied
separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately;
(75) “money” means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange,
letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other
instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or
exchange with Indian legal tender of another denomination but shall not include any currency that is held for its
numismatic value(Like – one paisa coin doesn’t have value of 1 paisa only, it’s value may vary from person to person);
(76) “motor vehicle” shall have the same meaning as assigned to it in clause (28) of section 2 of the Motor Vehicles
Act, 1988;
(77) “non-resident taxable person” means any person who occasionally undertakes transactions involving supply of
goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of
business or residence in India;
(78) “non-taxable supply” means a supply of goods or services or both which is not leviable to tax under this Act or
under the Integrated Goods and Services Tax Act;
(79) “non-taxable territory” means the territory which is outside the taxable territory;
(80) “notification” means a notification published in the Official Gazette and the expressions “notify” and
“notified” shall be construed accordingly;
(81) “other territory” includes territories other than those comprising in a State and those referred to in sub-clauses
(a) to (e) of clause (114) ;
(82) “output tax” in relation to a taxable person, means the tax chargeable under this Act on taxable supply of
goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis;
(83) “outward supply” in relation to a taxable person, means supply of goods or services or both, whether by sale,
transfer, barter, exchange, licence, rental, lease or disposal or any other mode, made or agreed to be made by such
person in the course or furtherance of business;
(84) “person” includes—
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
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(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India;
(g) any corporation established by or under any Central Act(LIC Act 1956), State Act (MCD Act)or Provincial Act
(This Act had a separate Preamble which declared that the objective of the British Government) or a Government company
as defined in clause (45) of section 2 of the Companies Act, 2013;
(h) any body corporate incorporated by or under the laws of a country outside India(Foreign Co.);
(i) aco-operative society registered under any law relating to co-operative societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860;
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;
(85) “place of business” includes––
(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place
where a taxable person stores his goods, supplies or receives goods or services or both; or
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent, by whatever name called;
(86) “place of supply” means the place of supply as referred to in Chapter V of the Integrated Goods and Services
Tax Act;
(87) “prescribed” means prescribed by rules made under this Act on the recommendations of the Council;
(88) “principal” means a person on whose behalf an agent carries on the business of supply or receipt of goods or
services or both;
(89) “principal place of business” means the place of business specified as the principal place of business in the
certificate of registration;
(90) “principal supply” means the supply of goods or services which constitutes the predominant element of a
composite supply and to which any other supply forming part of that composite supply is ancillary;
(91) “proper officer” in relation to any function to be performed under this Act, means the Commissioner or the
officer of the central tax who is assigned that function by the Commissioner in the Board;
(92) “quarter” shall mean a period comprising three consecutive calendar months, ending on the last day of March,
June, September and December of a calendar year;
(93) “recipient” of supply of goods or services or both, means—
(a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that
consideration;
(b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made
available, or to whom possession or use of the goods is given or made available; and
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(c) where no consideration is payable for the supply of a service, the person to whom the service is rendered,
and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the
supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or
both supplied;
(94) “registered person” means a person who is registered under section 25 but does not include a person having a
Unique Identity Number;
(95) “regulations” means the regulations made by the Board under this Act on the recommendations of the Council;
(96) “removal‘‘ in relation to goods, means—
(a) despatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such
supplier(Mean’s despatch at transport, and send bilty to recipient); or
(b) collection of the goods by the recipient thereof or by any other person acting on behalf of such
recipient(counter Sale at shops);
(97) “return” means any return prescribed or otherwise required to be furnished by or under this Act or the rules
made there under;
(98) “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead
of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-
section (3) or sub- section (4) of section 5 of the Integrated Goods and Services Tax Act;
(99) “Revisional Authority” means an authority appointed or authorised for revision of decision or orders as
referred to in section 108;
(100) “Schedule” means a Schedule appended to this Act;
(101) “securities” shall have the same meaning as assigned to it in clause (h) of section 2 of the Securities Contracts
(Regulation) Act, 1956;
(102) “services” means anything other than goods, money and securities but includes activities relating to the use of
money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form,
currency or denomination for which a separate consideration is charged(Mean’s Commission charged by money
exchange changer);
Explanation.–– For the removal of doubts, it is hereby clarified that the expression “services”includesfacilitating or
arranging transactions in securities(brokerage charged by stock brokers);
(103) “State” includes a Union territory with Legislature;
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(104) “State tax” means the tax levied under any State Goods and Services Tax Act;
(105) “supplier” in relation to any goods or services or both, shall mean the person supplying the said goods or
services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or
services or both supplied;
(106) “tax period” means the period for which the return is required to be furnished;
(107) “taxable person” means a person who is registered or liable to be registered under section 22 or section 24;
(108) “taxable supply” means a supply of goods or services or both which is leviable to tax under this Act[Mean’s
both supplies outward supplies – 2(83) or Inward supply – 2(67)];
(109) “taxable territory” means the territory to which the provisions of this Act apply;
(110) “telecommunication service” means service of any description (including electronic mail, voice mail, data
services, audio text services, video text services, radio paging and cellular mobile telephone services) which is
made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or
intelligence of any nature, by wire, radio, visual or other electromagnetic means;
(111) “the State Goods and Services Tax Act” means the respective State Goods and Services Tax Act, 2017;
(112) “turnover in State” or “turnover in Union territory” means the aggregate value of all taxable supplies
(excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt
supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter-
State supplies of goods or services or both made from the State or Union territory by the said taxable person but
excludes central tax, State tax, Union territory tax, integrated tax and cess;
(113) “usual place of residence” means––
(a) in case of an individual, the place where he ordinarily resides;
(b) in other cases, the place where the person is incorporated or otherwise legally constituted;
(114) “Union territory” means the territory of—
(a) the Andaman and Nicobar Islands;
(b) Lakshadweep;
(c) Dadra and Nagar Haveli and Daman and Diu;
(d) Ladakh;
(e) Chandigarh; and
(f) Other territory”.
Explanation.––For the purposes of this Act, each of the territories specified in sub-clauses (a) to (f) shall be
considered to be a separate Union territory;
(115) “Union territory tax” means the Union territory goods and services tax levied under the Union Territory
(116) “Union Territory Goods and Services Tax Act” means the Union Territory Goods and Services Tax Act,
2017;
(117) “valid return” means a return furnished under sub-section (1) of section 39 on which self-assessed tax has
been paid in full;
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(118) “voucher” means an instrument where there is an obligation to accept it as consideration or part consideration
for a supply of goods or services or both and where the goods or services or both to be supplied or the identities of
their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms
and conditions of use of such instrument;
(119) “works contract” means a contract for building, construction, fabrication, completion, erection, installation,
fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any
immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in
the execution of such contract;
(120) words and expressions used and not defined in this Act but defined in the Integrated Goods and Services Tax
Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States)
Act shall have the same meaning as assigned to them in those Acts;
(121) any reference in this Act to a law which is not in force in the State of Jammu and Kashmir, shall, in relation
to that State be construed as a reference to the corresponding law, if any, in force in that State.
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CHAPTER II of CGST Act 2017 - ADMINISTRATION
Section 3 - Officers under this Act
The Government shall, by notification, appoint the following classes of officers for the purposes of this Act,
namely:––
(a) Principal Chief Commissioners of Central Tax or Principal Directors General of Central Tax,
(b) Chief Commissioners of Central Tax or Directors General of Central Tax,
(c) Principal Commissioners of Central Tax or Principal Additional Directors General of Central Tax,
(d) Commissioners of Central Tax or Additional Directors General of Central Tax,
(e) Additional Commissioners of Central Tax or Additional Directors of Central Tax,
(f) Joint Commissioners of Central Tax or Joint Directors of Central Tax,
(g) Deputy Commissioners of Central Tax or Deputy Directors of Central Tax,
(h) Assistant Commissioners of Central Tax or Assistant Directors of Central Tax, and
(i) any other class of officers as it may deem fit:
Provided that the officers appointed under the Central Excise Act, 1944 shall be deemed to be the officers
appointed under the provisions of this Act.
Section 4 - Appointment of Officers
(1) The Board may, in addition to the officers as may be notified by the Government under section 3, appoint
such persons as it may think fit to be the officers under this Act.
(2) Without prejudice to the provisions of sub-section (1), the Board may, by order, authorise any officer
referred to in clauses (a) to (h) of section 3 to appoint officers of central tax below the rank of Assistant
Commissioner of central tax for the administration of this Act.
Section 5 - Powers of officers under GST
(1) Subject to such conditions and limitations as the Board may impose, an officer of central tax may exercise
the powers and discharge the duties conferred or imposed on him under this Act.
(2) An officer of central tax may exercise the powers and discharge the duties conferred or imposed under this
Act on any other officer of central tax who is subordinate to him.
(3) The Commissioner may, subject to such conditions and limitations as may be specified in this behalf by
him, delegate his powers to any other officer who is subordinate to him.
(4) Notwithstanding anything contained in this section, an Appellate Authority shall not exercise the powers
and discharge the duties conferred or imposed on any other officer of central tax.
Section 6 - Authorisation of officers of State tax or Union territory tax as proper officer in certain
circumstances
(1) Without prejudice to the provisions of this Act, the officers appointed under the State Goods and Services
Tax Act or the Union Territory Goods and Services Tax Act are authorised to be the proper officers for the
purposes of this Act, subject to such conditions as the Government shall, on the recommendations of the
Council, by notification, specify.
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(2) Subject to the conditions specified in the notification issued under sub-section (1),––
(a) where any proper officer issues an order under this Act, he shall also issue an order under the State Goods
and Services Tax Act or the Union Territory Goods and Services Tax Act, as authorised by the State Goods
and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, under
intimation to the jurisdictional officer of State tax or Union territory tax;
PO appointed under CGST Act can issue order for SGST or UTGST, as it is authorised by SGST Act and
UTGST Act, and the same case also be vise-versa.
(b) where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and
Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the
proper officer under this Acton the same subject matter.
If proceeding starts in SGST, UTGST Act, then it cannot start under CGST Act on the same subject matter.
(3) Any proceedings for rectification, appeal and revision, wherever applicable, of any order passed by an
officer appointed under this Act shall not lie before an officer appointed under the State Goods and Services
Tax Act or the Union Territory Goods and Services Tax Act.
As order has been passed by PO appointed under CGST Act, therefore rectification, appeal and revision against
such order is only to be held with PO appointed under CGST Act, not to PO appointed under SGST Act or
UTGST Act.
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CHAPTER III of CGST Act 2017 - LEVY AND COLLECTION OF TAX
Section 7 - Scope of supply
(1) For the purposes of this Act, the expression “supply” includes––
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or
disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa,
for cash, deferred payment or other valuable consideration.
Explanation.––For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any
other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person
and its members or constituents shall be deemed to be two separate persons and the supply of activities or
transactions inter se shall be deemed to take place from one such person to another;
(b) import of services for a consideration whether or not in the course or furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be made without a consideration;(Refer Schedule-I in
the last page of this chapter)
(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section
(1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II. (Refer
Schedule-II in the last page of this chapter)
(2)Notwithstanding anything contained in sub-section (1),––
(a) activities or transactions specified in Schedule III; or (Refer Schedule-III in the last page of this chapter)
(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority
in which they are engaged as public authorities, as may be notified by the Government on the recommendations of
the Council,
shall be treated neither as a supply of goods nor a supply of services.
(3) Subject to the provisions of [sub-sections (1), (1A) and (2)], the Government may, on the recommendations of
the Council, specify, by notification, the transactions that are to be treated as—
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(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.
Section 8 - Tax liability on composite and mixed supplies
The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:—
(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a
supply of such principal supply; and
(b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which
attracts the highest rate of tax.
Section 9 - Levy and collection
(1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax
on allintra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human
consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be
notified by the Government on the recommendations of the Council and collected in such manner as may be
prescribed and shall be paid by the taxable person.
(2) The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol),
natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the
Government on the recommendations of the Council.
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(3) The Governmentmay, on the recommendations of the Council, by notification, specify categories of supply of
goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or
services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for
paying the tax in relation to the supply of such goods or services or both.
(4) The Government may, on the recommendations of the Council, by notification, specify a class of registered
persons who shall, in respect of supply of specified categories of goods or services or both received from an
unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or
both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in
relation to such supply of goods or services or both.
(5) The Government may, on the recommendations of the Council, by notification, specify categories of services
the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are
supplied through it, and all the provisions of this Act shall applyto such electronic commerce operator as if he is the
supplier liable for paying the tax in relation to the supply of such services:
Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any
person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay
tax:
Suppose, person representing UBER(USA) in India became liable as ECO in india to pay GST on such services
Provided further that where an electronic commerce operator does not have a physical presence in the taxable
territory and also he does not have a representative in the said territory, such electronic commerce operator shall
appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.
Like Drop box service (OIDAR services) taken by any individual in India, then Dropbox appoint person in India
liable to pay GST on such services
Section 10 - Composition levy
(1) Notwithstanding anything to the contrary contained in this Actbutsubject to the provisions of sub-sections (3)
and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed
fifty lakh rupees, mayopt to pay, in lieu of the tax payable by him under sub-section (1) of section 9, an amount
calculated at such rate as may be prescribed, but not exceeding,––(CBIC has notified the increase to the threshold
limit from Rs 1.0 Crore to Rs. 1.5 Crores via notification, however, In case of North-Eastern states and
Himachal Pradesh, the limit is now Rs 75 lakh.)
(a) one percent of the turnover in State or turnover in Union territory in case of a manufacturer, (1% on TOTAL
Turnover)
(b) two and a half percent of the turnover in State or turnover in Union territory in case of persons engaged in
making supplies referred to in clause (b) of paragraph 6 of Schedule II, and (Restaurant services)(2.5% on
TAXABLE Turnover)
(c) half percent of the turnover in State or turnover in Union territory in case of other suppliers, (0.5% on
TAXABLE Turnover)
subject to such conditions and restrictions as may be prescribed:
Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher
amount, not exceeding one crore and fifty lakh rupees, as may be recommended by the Council:
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Provided further that a person who opts to pay tax under clause (a) or clause (b) or clause (c) may supply services
(other than those referred to in clause (b) of paragraph 6 of Schedule II), of value not exceeding ten per cent of
turnover in a State or Union territory in the preceding financial year or five lakh rupees, whichever is higher.
Value of services < 10 % of turnover, or 5 Lakhs, whichever is

higher
Explanation.––For the purposes of second proviso, the value of exempt supply of services provided by way of
extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount
shall not be taken into account for determining the value of turnover in a State or Union territory.
(2) The registered person shall be eligible to opt under sub-section (1), if:—
(a) save as provided in sub-section (1), he is not engaged in the supply of services(Mean’s only restaurant
services is allowed);
(b) he is not engaged in making any supply of goods or services which are not leviable to tax under this Act;
(c) he is not engaged in making any inter-State outward supplies of goods or services;
(d) he is not engaged in making any supply of goods or services through an electronic commerce operator who is
required to collect tax at source under section 52;
(e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the
Council ; and
(f) he is neither a casual taxable personnor a non-resident taxable person
Provided that where more than one registered persons are having the same Permanent Account Number (issued
under the Income-tax Act, 1961), the registered person shall not be eligible to opt for the scheme under sub-section
(1) unless all such registered persons opt to pay tax under that sub-section.
(2A) Notwithstanding anything to the contrary contained in this Act, but subject to the provisions of sub-sections
(3) and (4) of section 9, a registered person, not eligible to opt to pay tax under sub-section (1) and sub-section (2),
whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of
the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate as may be
prescribed, but notexceeding three per cent. of the turnover in State or turnover in Union territory, if he is not––
(a) engaged in making any supply of goods or services which are not leviable to tax under this Act;
(b) engaged in making any inter-State outward supplies of goods or services;
(c) engaged in making any supply of goods or services through an electronic commerce operator who is required to
collect tax at source under section 52;
(d) a manufacturer of such goods or supplier of such services as may be notified by the Government on the
recommendations of the Council; and
(e) a casual taxable person or a non-resident taxable person:
Provided that where more than one registered person are having the same Permanent Account Number issued under
the Income-tax Act, 1961, the registered person shall not be eligible to opt for the scheme under this sub-section
unless all such registered persons opt to pay tax under this sub-section.
(3) The option availed of by a registered person under sub-section (1) or sub-section (2A), as the case may be, shall
lapse with effect from the day on which his aggregate turnover during a financial year exceeds the limit specified
under sub-section (1) or sub-section (2A), as the case may be.
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(4) A taxable person to whom the provisions of sub-section (1) or, as the case may be, sub-section (2A) apply shall
not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit of input tax.
(5) If the proper officer has reasons to believe that a taxable person has paid tax under sub-section (1) or sub-
section (2A), as the case may be, despite not being eligible, such person shall, in addition to any tax that may be
payable by him under any other provisions of this Act, be liable to a penalty and the provisions of section 73 or
section 74 shall, mutatis mutandis, apply for determination of tax and penalty.
Explanation 1.––For the purposes of computing aggregate turnover of a person for determining his eligibility to
pay tax under this section, the expression “aggregate turnover” shall include the value of supplies made by such
person from the 1st day of April of a financial year up to the date when he becomes liable for registration under
thisAct, but shall not include the value of exempt supply of services provided by way of extending deposits, loans
or advances in so far as the consideration is represented by way of interest or discount.
Explanation 2.––For the purposes of determining the tax payable by a person under this section, the expression
“turnover in State or turnover in Union territory” shall not include the value of following supplies, namely:––
(i) supplies from the first day of April of a financial year up to the date when such person becomes liable for
registration under this Act; and
(ii) exempt supply of services provided by way of extending deposits, loans or advances in so far as the
consideration is represented by way of interest or discount.
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Section 11 - Power to grant Exemption
(1) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the
recommendations of the Council, by notification, exempt generally, either absolutely or subject to such conditions
as may be specified therein, goods or services or both of any specified description from the whole or any part of the
taxleviable thereon with effect from such date as may be specified in such notification.
recommendations of the Council, by special order in each case, under circumstances of an exceptional nature to be
stated in such order, exempt from payment of tax any goods or services or both on which tax is leviable.
(3) The Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or
applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an
explanation in such notification or order, as the case may be, by notification at any time within one year of issue of
the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as
if it had always been the part of the first such notification or order, as the case may be.
Explanation inserted via notification deemed to be part of previous notification from very starting itself
Explanation.––For the purposes of this section, where an exemption in respect of any goods or services or both
from the whole or part of the tax leviable thereon has been granted absolutely, the registered person supplying such
goods or services or both shall not collect the tax, in excess of the effective rate, on such supply of goods or
services or both.
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SCHEDULE-I - ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT

CONSIDERATION
1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
2. Supply of goods or services or both between related persons or between distinct persons as specified in section
25, when made in the course or furtherance of business:
Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee
shall not be treated as supply of goods or services or both.
3. Supply of goods—
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
4. Import of services by a person from a related person or from any of his other establishments outside India, in the
course or furtherance of business.
SCHEDULE-II - ACTIVITIES OR TRANSACTIONS TO BE TREATED AS SUPPLY OF GOODS OR

SUPPLY OF SERVICES
1. Transfer
(a) any transfer of the title in goods is a supply of goods; (Sale of car)
(b) any transfer of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of
services;(Furniture given on lease)
(c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future
date upon payment of full consideration as agreed, is a supply of goods. (Sale agreement of floor before
completion certificate)
2. Land and Building
(a) any lease, tenancy, easement, licence to occupy land is a supply of services;
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(b) any lease or letting out of the building including a commercial, industrial or residential complex for business or
commerce, either wholly or partly, is a supply of services.
3. Treatment or process
Any treatment or process which is applied to another person's goods is a supply of services.(Job work)
4. Transfer of business assets
(a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of
the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration,
such transfer or disposal is a supply of goods by the person;
(b) where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the
business are put to any private use or are used, or made available to any person for use, for any purpose other than a
purpose of the business, the usage or making available of such goods is a supply of services; (Business machinery
not in use, give on lease to someone)
(c) where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on
by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he
ceases to be a taxable person, unless—
(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a personal representative who is deemed to be a taxable person.
5. Supply of services
The following shall be treated as supply of services, namely:—
(a) renting of immovable property;
(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended
for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of
completion certificate, where required, by the competent authority orafter its first occupation, whichever is earlier.
Explanation.—For the purposes of this clause—
(1) the expression "competent authority" means the Government or any authority authorized to issue completion
certificate under any law for the time being in force and in case of non-requirement of such certificate from such
authority, from any of the following, namely:—
(i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; or
(ii) a chartered engineer registered with the Institution of Engineers (India); or
(iii) a licensed survey or of the respective local body of the city or town or village or development or planning
authority;
(2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil
structure;
(c) temporary transfer or permitting the use or enjoyment of any intellectual property right;
(d) development, design, programming, customization, adaptation, upgradation, enhancement, implementation of

information technology software;
(e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and
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(f) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred
payment or other valuable consideration.
6. Composite supply
The following composite supplies shall be treated as a supply of services, namely:—
(a) works contract as defined in clause (119) of section 2; and
(b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any
other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such
supply or service is for cash, deferred payment or other valuable consideration. (Restaurant services)
SCHEDULE-III - ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A

SUPPLY OF GOODS NOR A SUPPLY OF SERVICES
1. Services by an employeeto the employer in the course of or in relation to his employment.
2. Services by any court or Tribunal established under any law for the time being in force.
3. (a) the functions performed by the Members of Parliament, Members of State Legislature, Members of
Panchayats, Members of Municipalities and Members of other local authorities;
(b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that
capacity; or
(c) the duties performed by any person as a Chair person or a Member or a Director in a body established by the
Central Government or a State Government or local authority and who is not deemed as an employee before the
commencement of this clause.
4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
➢ Sale of land is not supply as per schedule III,

➢ Sale of Building is also not supply as per schedule III only if, if got transfer before completion
certificate or before first occupation, whichever is earlier. (Refer Paragraph 5(b) above of schedule-II)
6. Actionable claims, other than lottery, betting and gambling. (Lottery, betting is chargeable to GST at higher
rate)
7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without
such goods entering into India.
8. (a) Supply of warehoused goods to any person before clearance for home consumption;(Goods sold directly
from warehouse without self-clearing for home consumption by the person itself)
(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after
the goods have been dispatched from the port of origin located outside India but before clearance for home
consumption. (goods sold before reaching India to other person)
Explanation 1 - For the purposes of paragraph 2, the term "court" includes District Court, High Court and Supreme
Court.
Explanation 2 - For the purposes of paragraph 8, the expression - “warehoused goods” shall have the same meaning
as assigned to it in the Customs Act, 1962.
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Supply under GST
Supply is considered a taxable event for charging tax under GST law. The liability to pay tax arises at the ‘time of
supply of goods or services’. It means no supply no GST.Thus, determining whether or not a transaction falls
under the meaning of supply is important to decide GST’s applicability.
The meaning and scope of supply under GST can be understood in terms of following six parameters, which can
be adopted to characterize a transaction as supply:
1. Supply of goods or services. Supply of anything other than goods or services does not attract GST.
2. Supply should be made for a consideration.
3. Supply should be made in the course or furtherance of business.
4. Supply should be made by a taxable person.
5. Supply should be a taxable supply.
6. Supply should be made within the taxable territory
Exceptions:
(1) Any transaction involving supply of goods or services without consideration is not a supply, barring few
exceptions (Schedule-I), in which a transaction is deemed to be a supply even without consideration.
(2) Further, import of services for a consideration, whether or not in the course or furtherance of business is
treated as supply, import of goods not covered here as GST RCM liability on such transaction imposed under
section 3 of custom tariff Act 1975, therefore not covered in GST Act.
Scope of Supply:
(1) Section 7(1)(a) of CGST Act, 2017: all forms of supply of goods or services or both made or agreed to be
made for a consideration by a person in the course or furtherance of business; for example:
(2) Section 7(1)(b) of CGST Act, 2017, importation of services for a consideration whether or not in the course
or furtherance of business.
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(a) it is applicable only for services and not for goods

(b) It should be import of service (as referred under Section 2(11) of IGST Act, 2017)
(c) Services shall be provided with consideration
(d) Services may be or not be in the course or furtherance of business
(3)Section 7(1)(c) of CGST Act, 2017,The activities specified in Schedule I, made or agreed to be made without a
consideration;
1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
2. Supply of goods or services or both between related persons or between distinct persons as specified in section
25, when made in the course or furtherance of business.
Provided that gifts not exceeding ` 50,000/- in value in a financial year by an employer to an employee shall not
be treated as supply of goods or services or both.
Related person:
As per Explanation to Section 15,
(a) persons shall be deemed to be “related persons” if––
(i) such persons are officers or directors of one another’s businesses;
(ii) such persons are legally recognized partners in business;
(iii) such persons are employer and employee;
(iv) any person directly or indirectly owns, controls or holds 25% or more of the outstanding voting stock or shares
of both of them;
(v) one of them directly or indirectly controls the other;
(vi) both of them are directly or indirectly controlled by a third person;
(vii) together they directly or indirectly control a third person; or
(viii) they are members of the same family;
(b) the term “person” also includes legal persons;
(c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or
sole concessionaire, howsoever described, of the other, shall be deemed to be related.
Distinct person:
Every place of business of a person where separate registration is obtained under the same PANfor output supply
will be considered as distinct person
Some cases under related person:
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Employer-employee
1. Directors of a company
3. Supply of goods—
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal(Selling
agent); or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal
(Buying agent)
4. Import of services by a person from a related person or from any of his other establishments outside India, in
the course or furtherance of business
Section 7(1)(b) vs Section 7(1)(c) of CGST Act, 2017
Section Nature of service Consideration Business purpose

Section 7(1)b of CGST Import of service With consideration Not required
Act
Section 7(1)c of CGST Import of services by a person Without consideration Necessarily required
Act from related person or from any
other Establishment outside India
(i.e. distinct person)
Now we move to next important Section 7(1A) of CGST Act, 2017, where certain activities or transactions
constitute a supply in accordance with the provisions of subsection (1), they shall be treated either as supply of
goods or supply of services as referred to in Schedule II.”
This section is previously section 7(1) (d) of CGST Act, 2017, now amended to Section 7(1A) of CGST Act, 2017
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What do not constitute a supply under GST?
As per Section 7(2) of CGST Act, 2017, Supply excludes:
(a) Activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a State Government or any local
authority in which they are engaged as public authorities, as may be notified by the Government on the
recommendations of the Council,
Note: Activities specified in Schedule III (i.e. Negative list):
1. Services by employee to employer in the course of or in relation to his employment.
2. Services by court or Tribunal
3. Services by Member of Parliament, MLA and others
4. Services by funeral, burial etc.
5. Sale of land/Building, Except clause (b) of Paragraph5 of Schedule-II
6. Actionable claimother than lottery, betting and gambling.
The following paragraphs inserted vide the CGST (Amendment) Act, 2018, namely:–
7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without
such goods entering into India.
8. (a) Supply of warehoused goods to any person before clearance for home consumption;
(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods,
after the goods have been dispatched from the port of origin located outside India but before clearance for home
consumption. (High sea sales)
Section 7(3) of the CGST Act, 2017
the Government may, on the recommendations of the Council, specify, by notification, the transactions that are
to be treated as—
(a) asupply of goods and not as a supply of services; or
(b) asupply of services and not as a supply of goods.
Types of supply:
As per section 8 of CGST Act, 2017 based on the combination of two or more goods sold supply can be
1. Composite Supply: Composite supply consists of two or more goods/services, which is naturally abundled
with each other in the ordinary course of business and one of them is a principal supply. The items cannot
be supplied separately.
Note: Principal supply means the supply of goods or services, which constitute the predominant element of a
composite supply and to which another supply is ancillary/secondary.
For tax liability purpose, Composite supply consisting of two or more supplies shall be treated as a supply of
that item which is principal supply and rate levy of that principal supply.
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Following two conditions are necessary for composite supply:
(a) Supply of two or more goods or services together of which one is a principal supply,
(b) It should be a natural bundle and they cannot be separated.
2. Mixed Supply: two or more individual supplies combination of goods or services with each other for a
single price. In other words, the combination of goods or services is not bundled due to natural
necessities, and they can be supplied individually in the ordinary course of business.
For tax liability purpose, mixed supply consisting of two or more supplies shall be treated as a supply of
that item which has the highest tax rate.
Summary in short (For revision)

Supply
Section 7(1) Section 7(1A) Section 7(2)
Section Section
7(1)(a) - Schedule II 7(2)(a) -
Supply Schedule
INCLUDES III
Section Section
7(1)(B) - 7(2)(b) -
Importation Activities
of services notified by
Govt
Section
7(1)(c) -
Schedule I
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CHAPTER IV of CGST Act 2017 - TIME AND VALUE OF SUPPLY
Section 12 - Time of Supply of Goods
(1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the
provisions of this section.
(2) The time of supply of goods shall be the earlier of the following dates, namely:—
(a) the date of issue of invoice by the supplier or the last date on which he is required, under section 31, to issue the
invoice with respect to the supply; or
(b) the date on which the supplier receives the payment with respect to the supply:
Provided that where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the
amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of
the said supplier, be the date of issue of invoice in respect of such excess amount.
(For Example – Airtel bill came to a company of Rs 9,100 and company paid in round off Rs 10,000 so that
the extra amount 900 will be adjusted afterwards with the next month bill, so Airtel can pay GST of 900 extra
received either today itself or next month when he receive less amount because of this advance receipt)
Explanation 1.––For the purposes of clauses (a) and (b), “supply” shall be deemed to have been made to the extent
it is covered by the invoice or, as the case may be, the payment.
Explanation 2.––For the purposes of clause (b), “date on which the supplier receives the payment” shall be the date
on which the payment is entered in his books of account or the date on which the payment is credited to his bank
account, whichever is earlier.
As time of supply on advances received, in case of supply of goods resulting so many issues to the industries
as old regime taxed VAT/CST on sale basis, not on payment basis and advance receipt earlier if need to be
refunded back, then such GST on such advances need to be claim refund, create irrelevant efforts to the
taxpayer’s.
So, via N/N 66/2017, condition of section 12(2)(b) has been removed in case of goods which results time of
supply on issue of invoice or last date under section 31, whichever is earlier only.
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Not Applicable to composite dealers, mean’s composite dealers has to pay 0.5% +0.5 % in case of advance receipt
also.
(3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply
shall be the earliest of the following dates, namely:—
(a) the date of the receipt of goods; or
(b) the date of payment as entered in the books of account of the recipient or the date on which the payment is
debited in his bank account, whichever is earlier; or
(c) the date immediately following thirty days from the date of issue of invoice or any other document(Like - cash
memo), by whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c),
the time of supply shall be the date of entry in the books of account of the recipient of supply.
(4) In case of supply of vouchers by a supplier, the time of supply shall be—
(a) the date of issue of voucher, if the supply is identifiable at that point; or
(b) the date of redemption of voucher, in all other cases.
(5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section
(3) or sub-section (4), the time of supply shall––
(a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
(b) in any other case, be the date on which the tax is paid.
(6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or
penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in
value.
Section 13 - Time of Supply of Services
(1) The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the
provisions of this section.
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(2) The time of supply of services shall be the earliest of the following dates, namely:—
(a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under section
31or the date of receipt of payment, whichever is earlier; or
(b) the date of provision of service, if the invoice is not issued within the period prescribed under section 31or the
date of receipt of payment, whichever is earlier; or
(c) thedate on which the recipient shows the receipt of services in his books of account, in a case where the
provisions of clause (a) or clause (b) do not apply:
Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the
amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of
the said supplier, be the date of issue of invoice relating to such excess amount.
Explanation.––For the purposes of clauses (a) and (b)––
(i) thesupply shall be deemed to have been made to the extent it is covered by the invoiceor, as the case may be, the
payment;
(ii) “date of receipt of payment” shall be the date on which the payment is entered in the books of account of the
supplier or the date on which the payment is credited to his bank account, whichever is earlier.
(3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply
shall be the earlier of the following dates, namely:––
(a) the date of payment as entered in the books of account of the recipient or the date on which the payment is
debited in his bank account, whichever is earlier; or
(b) the date immediately following sixty days from the date of issue of invoice or any other document, by whatever
name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of
supply shall be the date of entry in the books of account of the recipient of supply:
Provided further that in case of supply by associated enterprises, where the supplier of service is located outside
India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of
payment, whichever is earlier.
(4) In case of supply of vouchers by a supplier, the time of supply shall be––
(a) the date of issue of voucher, if the supply is identifiable at that point; or
(b) the date of redemption of voucher, in all other cases.
(5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section
(3) or sub-section (4), the time of supply shall––
(a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
(b) in any other case, be the date on which the tax is paid.
(6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or
penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in
value.
Section 14 - Change in rate of tax in respect of supply of goods or services
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Notwithstanding anything contained in section 12 or section 13, the time of supply, where there is a change in the
rate of tax in respect of goods or services or both, shall be determined in the following manner, namely:––
(a) in case the goods or services or both have been supplied before the change in rate of tax,––
(i) where the invoice for the same has been issued and the payment is also received after the change in rate of tax,
the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or
(ii) where the invoice has been issued prior to the change in rate of tax but payment is received after the change in
rate of tax, the time of supply shall be the date of issue of invoice; or
(iii) where the payment has been received before the change in rate of tax, but the invoice for the same is issued
after the change in rate of tax, the time of supply shall be the date of receipt of payment;
(b) in case the goods or services or both have been supplied after the change in rate of tax,––
(i) where the payment is received after the change in rate of tax but the invoice has been issued prior to the change
in rate of tax, the time of supply shall be the date of receipt of payment; or
(ii) where the invoice has been issued and payment is received before the change in rate of tax, the time of supply
shall be the date of receipt of paymentor date of issue of invoice, whichever is earlier; or
(iii) where the invoice has been issued after the change in rate of tax but the payment is received before the change
in rate of tax, the time of supply shall be the date of issue of invoice:
Provided that the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank
account is after four working days from the date of change in the rate of tax.
Explanation.––For the purposes of this section, “date of receipt of payment” shall be the date on which the payment
is entered in the books of account of the supplier or the date on which the payment is credited to his bank account,
whichever is earlier.
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CHAPTER IV of CGST Act 2017 - TIME AND VALUE OF SUPPLY
Section 15 - Value of Taxable Supply
(1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid
or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not
related and the price is the sole consideration for the supply.
(2) The value of supply shall include–––
(a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act,
the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and
Services Tax (Compensation to States) Act, if charged separately by the supplier;
(b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the
recipient of the supply and not included in the price actually paid or payable for the goods or services or both;
(Like – freight cost)
(c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and
any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the
time of, or before delivery of goods or supply of services;
(d) interest or late fee or penalty for delayed payment of any consideration for any supply; and
(e) Subsidies directly linked to the price excluding subsidies provided by the Central Government and State
Governments.
(Like on LPG cylinders, SG gives subsidy which excluded from value)
Explanation.––For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply
of the supplier who receives the subsidy. (Because GST to be levy on value of subsidy also)
(3) The value of the supply shall not include any discount which is given––
(a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of
such supply; and
(b) after the supply has been effected, if—
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(i) such discount is established in terms of an agreement entered into at or before the time of such supply and
specifically linked to relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been
reversed by the recipient of the supply. (Supplier will issue credit note of such discount to recipient, recipient has
to reverse its ITC on the basis of such credit note received by supplier)
(4) Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the
same shall be determined in such manner as may be prescribed.
(5) Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be
notified by the Government on the recommendations of the Council shall be determined in such manner as may be
prescribed. (As per Rules 27 to 35 of CGST Rules 2017)
Explanation.—For the purposes of this Act,––
(a) persons shall be deemed to be “related persons” if––
(i) such persons are officers or directors of one another‘s businesses;
(ii) such persons are legally recognised partners in business;
(iii) such persons are employer and employee;
(iv) any person directly or indirectly owns, controls or holds twenty-five percent or more of the outstanding voting
stock or shares of both of them;
(v) one of them directly or indirectly controls the other;
(vi) both of them are directly or indirectly controlled by a third person;
(vii) together they directly or indirectly control a third person; or
(viii) they are members of the same family;
(b) the term “person” also includes legal persons;
(c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole
concessionaire, howsoever described, of the other, shall be deemed to be related.
CHAPTER IV of CGST Rules 2017
DETERMINATION OF VALUE OF SUPPLY
Rule 27 - Value of supply of goods or services where the consideration is not wholly in money
Where the supply of goods or services is for a consideration not wholly in money, the value of the supply shall,-
(a) be the open market value of such supply;
(b) if the open market value is not available under clause (a), be the sum total of consideration in money and any
such further amount in money as is equivalent to the consideration not in money, if such amount is known at the
time of supply;
(c) if the value of supply is not determinable under clause (a) or clause (b), be the value of supply of goods or
services or both of like kind and quality;
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(d) if the value is not determinable under clause (a) or clause (b) or clause (c), be the sum total of consideration in
money and such further amount in money that is equivalent to consideration not in money as determined by the
application of rule 30 or rule 31in that order.
Illustration:
(1) Where a new phone is supplied for twenty thousand rupees along with the exchange of an old phone and if the
price of the new phone without exchange is twenty four thousand rupees, the open market value of the new phone is
twenty four thousand rupees.
(2) Where a laptop is supplied for forty thousand rupees along with the barter of a printer that is manufactured by
the recipient and the value of the printer known at the time of supply is four thousand rupees but the open market
value of the laptop is not known, the value of the supply of the laptop is forty four thousand rupees.
Rule 28 - Value of supply of goods or services or both between distinct or related persons, other than
through an agent
The value of the supply of goods or services or both between distinct persons as specified in sub-section (4) and (5)
of section 25 or where the supplier and recipient are related,other than where the supply is made through an agent,
shall-
(a) be the open market value of such supply;
(b) if the open market value is not available, be the value of supply of goods or services of like kind and quality;
(c) if the value is not determinable under clause (a) or (b), be the value as determined by the application of rule 30
or rule 31,in that order:
Provided that where the goods are intended for further supply as such by the recipient, the value shall, at the option
of the supplier, be an amount equivalent to ninety percent of the price charged for the supply of goods of like kind
and quality by the recipientto his customernot being a related person:
Suppose if A and B are related persons, and such supply is for resale by related person (Mr.B) then the value of
supply by Main Person (Mr. A) would also be at 90% of the resale price by Mr. B.
Reason behind this even under Rule 30, value shall be deemed as around of 10% margin of cost, the 10%
around criteria can also be deemed in resale case by related persons.
Provided further that where the recipient is eligible for full input tax credit, the value declared in the invoice shall
be deemed to be the open market value of the goods or services.
Reason behind this is that whatever be the amount of main supply (Mr.A), reseller(Mr.B) would get ITC of
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such amount so govt. would not have any problem with that amount, either that value is high or low, so that’s
why value declared in invoice will deemed as OMV in that case.
Rule 29 - Value of supply of goods made or received through an agent
The value of supply of goods between the principal and his agent shall-
(a) be the open market value of the goods being supplied, orat the option of the supplier, be ninety percent of the
price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related
person, where the goods are intended for further supply by the said recipient.
Illustration: A principal supplies groundnut to his agent and the agent is supplying groundnuts of like kind and
quality in subsequent supplies at a price of five thousand rupees per quintal on the day of the supply. Another
independent supplier is supplying groundnuts of like kind and quality to the said agent at the price of four thousand
five hundred and fifty rupees per quintal. The value of the supply made by the principal shall be four thousand five
hundred and fifty rupees per quintal or where he exercises the option, the value shall be 90 percent of five thousand
rupees i.e., four thousand five hundred rupees per quintal.
(b) Where the value of a supply is not determinable under clause (a), the same shall be determined by the
application of rule 30 or rule 31in that order.
Rule 30 - Value of supply of goods or services or both based on cost
Where the value of a supply of goods or services or both is not determinable by any of the preceding rules of this
Chapter, the value shall be one hundred and ten percent of the cost of production or manufacture or the cost of
acquisition of such goods or the cost of provision of such services. (Value = 110% X cost)
Rule 31 - Residual method for determination of value of supply of goods or services or both
Where the value of supply of goods or services or both cannot be determined under rules 27 to 30, the same shall
be determined using reasonable means consistent with the principles and the general provisions of section 15 and
the provisions of this Chapter:
Provided that in the case of supply of services, the supplier may opt for this rule, ignoring rule 30.
Rule 31A - Value of supply in case of lottery, betting, gambling and horse racing(This rule is Mandatory)
(1) Notwithstanding anything contained in the provisions of this Chapter, the value in respect of supplies specified
below shall be determined in the manner provided hereinafter.
(2) The value of supply of lottery shall be deemed to be 100/128 of the face value of ticket or of the price as
notified in the Official Gazette by the Organising State, whichever is higher.
Explanation:– For the purposes of this sub-rule, the expression “Organising State” has the same meaning as
assigned to it in clause (f) of sub-rule (1) of rule 2 of the Lotteries (Regulation) Rules, 2010.
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(3) The value of supply of actionable claim in the form of chance to win in betting, gambling or horse racing in a
race club shall be 100% of the face value of the bet or the amount paid into the totalisator.
Rule 32 - Determination of value in respect of certain supplies (This rule is optional)
(1)Notwithstanding anything contained in the provisions of this Chapter, the value in respect of supplies specified
below shall, at the option of the supplier, be determined in the manner provided hereinafter.
(2) The value of supply of services in relation to the purchase or sale of foreign currency, including money
changing, shall be determined by the supplier of services in the following manner, namely:-
(a) for a currency, when exchanged from, or to, Indian Rupees, the value shall be equal to the difference in the
buying rate or the selling rate, as the case may be, and the Reserve Bank of India reference rate for that currency at
that time, multiplied by the total units of currency:
Provided that in case where the Reserve Bank of India reference rate for a currency is not available, the value shall
be one percent of the gross amount of Indian Rupees provided or received by the person changing the money:
Provided further that in case where neither of the currencies exchanged is Indian Rupees, the value shall be equal to
one percent of the lesser of the two amounts the person changing the money would have received by converting
any of the two currencies into Indian Rupee on that day at the reference rate provided by the Reserve Bank of India.
Provided also that a person supplying the services may exercise the option to ascertain the value in terms of clause
(b) for a financial year and such option shall not be withdrawn during the remaining part of that financial year.
(b) at the option of the supplier of services, the value in relation to the supply of foreign currency, including money
changing, shall be deemed to be-
(i) one percent of the gross amount of currency exchanged for an amount up to one lakh rupees, subject to a
minimum amount of two hundred and fifty rupees;
(ii) one thousand rupees and half of a percent of the gross amount of currency exchanged for an amount exceeding
one lakh rupees and up to ten lakh rupees; and
(iii) five thousand and five hundred rupees and one tenth of a percent of the gross amount of currency exchanged
for an amount exceeding ten lakh rupees, subject to a maximum amount of sixty thousand rupees.
(3) The value of the supply of services in relation to booking of tickets for travel by air provided by an air travel
agent shall be deemed to be an amount calculated at the rate of five percent of the basic fare in the case of domestic
bookings, and at the rate of ten percent of the basic fare in the case of international bookings of passage for travel
by air.
Explanation.- For the purposes of this sub-rule, the expression “basic fare” means that part of the air fare on which
commission is normally paid to the air travel agent by the airlines.
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(4)The value of supply of services in relation to life insurance business shall be,-
(a) the gross premium charged from a policy holder reduced by the amount allocated for investment, or savings on
behalf of the policy holder, if such an amount is intimated to the policy holder at the time of supply of service;
(b) in case of single premium annuity policies other than (a), ten percentof single premium charged from the policy
holder; or
(c) inall other cases, twenty five percent of the premium charged from the policy holder in the first year and twelve
and a half percent of the premium charged from the policy holder in subsequent years:
Provided that nothing contained in this sub-rule shall apply where the entire premium paid by the policy holder is
only towards the risk cover in life insurance.
(5) Where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e., used
goods as such or after such minor processing which does not change the nature of the goods and where no input tax
credit has been availed on the purchase of such goods, the value of supply shall be the difference between the
selling price and the purchase price and where the value of such supply is negative, it shall be ignored:
Provided that the purchase value of goods repossessed from a defaulting borrower, who is not registered, for the
purpose of recovery of a loan or debt shall be deemed to be the purchase price of such goods by the defaulting
borrower reduced by five percentage points for every quarter or part thereof, between the date of purchase and the
date of disposal by the person making such repossession.
For Example – Mr.A purchase a car of Rs. 10 Lakhs on 01/07/2017 via bank loan, but he defaults in
repayments and bank recovers his vehicle on 31/05/2019 and make auction at 8 Lakhs on 14/08/2019
Therefore Margin = SP – PP
= 8 Lakhs – {10 Lakhs – (5% per quarter from 01/07/2017 to 14/08/2019)}
= 8 Lakhs – (10 Lakhs – (5% X 9 quarters)
= 8 Lakhs – 5.5 Lakhs = 2.5 Lakhs
(6) The value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp) which is redeemable
against a supply of goods or services or both shall be equal to the money value of the goods or services or both
redeemable against such token, voucher, coupon, or stamp.
(7) The value of taxable services provided by such class of service providers as may be notified by the
Government, on the recommendations of the Council, as referred to in paragraph 2 of Schedule I of the said Act
between distinct persons as referred to in section 25, where input tax credit is available, shall be deemed to be NIL.
(No such class of SP has been notified by government yet, therefore this section is not in force now)
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Rule 32A - Value of supply in cases where Kerala Flood Cess is applicable
The value of supply of goods or services or both on which Kerala Flood Cess is levied under clause 14 of the
Kerala Finance Bill, 2019 shall be deemed to be the value determined in terms of section 15 of the Act, but shall
not include the said cess.
Rule 33 - Value of supply of services in case of pure agent
Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a
supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following
conditions are satisfied, namely,- (Refer below example for complete clarity)
(i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third
party(ROC) on authorisation by such recipient; (Payment made on behalf of recipient)
(ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the
invoice issued by the pure agent to the recipient of service; and (Exact same amount has been recovered from the
recipient)
(iii) the supplies procured by the pure agent from the third party(ROC) as a pure agent of the recipient of supply
are in addition to the services he supplies on his own account. (own Professional charges would be separately
mentioned in the invoice along with the legal Fees of ROC)
Explanation.-For the purposes of this rule, the expression “pure agent “means a person who-
(a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or
costs in the course of supply of goods or services or both;
(b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent
of the recipient of supply;
(c) does not use for his own interest such goods or services so procured; and
(d) receives only the actual amount incurred to procure such goods or services in addition to the amount received
for supply he provides on his own account.(Invoice mention Professional charges – 8000/- and Legal Fees –
2000/-)
Illustration: - Corporate services firm A is engaged to handle the legal work pertaining to the incorporation of
Company B. Other than its service fees, A also recovers from B, registration fee and approval fee for the name of
the company paid to the Registrar of Companies. The fees charged by the Registrar of Companies for the
registration and approval of the name are compulsorily levied on B. A is merely acting as a pure agent in the
payment of those fees. Therefore, A‘s recovery of such expenses is a disbursement and not part of the value of
supply made by A to B.
Rule 34 - Rate of exchange of currency, other than Indian rupees, for determination of value
(1) The rate of exchange for determination of value of taxable goods shall be the applicable rate of exchange as
notified by the Board under section 14 of the Customs Act, 1962 for the date of time of supply of such goods in
terms of section 12 of the Act.
(2) The rate of exchange for determination of value of taxable services shall be the applicable rate of exchange
determined as per the generally accepted accounting principles(GAAP – RBI, SBI rate as may be prescribed) for
the date of time of supply of such services in terms of section 13 of the Act.
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Rule 35 - Value of supply inclusive of integrated tax, central tax, State tax, Union territory tax
Where the value of supply is inclusive of integrated tax or, as the case may be, central tax, State tax, Union territory
tax, the tax amount shall be determined in the following manner, namely,-
Tax amount = (Value inclusive of taxes Xtax rate in % of IGST or, as the case may be, CGST, SGST or UTGST) ÷
(100+ sum of tax rates, as applicable, in %)
GST = ______ Value__________ X GST Rate

100 + GST Rate
Explanation.-For the purposes of the provisions of this Chapter, the expressions-
(a) “open market value” of a supply of goods or services or both means the full value in money, excluding the
integrated tax, central tax, State tax, Union territory tax and the cess payable by a person in a transaction, where the
supplier and the recipient of the supply are not related and the price is the sole consideration, to obtain such supply
at the same time when the supply being valued is made;
(b) “supply of goods or services or both of like kind and quality” means any other supply of goods or services or
both made under similar circumstances that, in respect of the characteristics, quality, quantity, functional
components, materials, and the reputation of the goods or services or both first mentioned, is the same as, or closely
or substantially resembles, that supply of goods or services or both.
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CHAPTER V of CGST Act 2017 - INPUT TAX CREDIT
Section 16 - Eligibility and conditions for taking input tax credit
(1) Every registered persons hall, subject to such conditions and restrictions as may be prescribed and in the
manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services
or both to him which are used or intended to be used in the course or furtherance of his business and the said
amount shall be credited to the electronic credit ledger of such person.
(2) Notwithstanding anything contained in this section,no registered person shall be entitled to the credit of any
input tax in respect of any supply of goods or services or both to him unless,––
(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other
tax paying documents as may be prescribed; (All ITC availment documents mentioned in Rule 36(1),
mentioned at last of this chapter for reference)
(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the
statement of outward supplies and such details have been communicated to the recipient of such invoice or debit
note in the manner specified under section 37; (In simple manner, after 01/01/2022, we can only avail ITC
when it shown in GSTR-2B)
(b) he has received the goods or services or both.
Explanation.— For the purposes of this clause, it shall be deemed that the registered person has received the
goods or, as the case may be, services
(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such
registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way
of transfer of documents of title to goods or otherwise; (goods are deemed to be received when it directly send to
job worker)
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(ii) where the services are provided by the supplier to any person on the direction of and on account of such
registered person;
(c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the
Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and
(d) he has furnished the return under section 39:
Provided that where the goods against an invoice are received in lots or instalments, the registered person shall
be entitled to take credit upon receipt of the last lot or instalment:
Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the
supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax
payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier,
an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along
with interest thereon, in such manner as may be prescribed: (if payment not made in 180 days, then ITC will
not reversed, but it added in output tax liability as their may a chance that sufficient amount of ITC for that
month would not be there, so according added back as interest on such is also to be collect)
Provided also that the recipient shall be entitled to avail of the credit of input taxon payment made by him of the
amount towards the value of supply of goods or services or both along with tax payable thereon.
(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and
plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax
component shall not be allowed.
(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for
supply of goods or services or both after the due date of furnishing of the return under section 39 for the month
of September following the end of financial year to which such invoice or debit note pertains or furnishing of the
relevant annual return, whichever is earlier.
Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the
return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the
said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for
supply of goods or services or both made during the financial year 2017-18, the details of which have been
uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-
section (1) of said section for the month of March, 2019. (This amendment made especially for FY 2017-18,
where ITC is allowed till Sep’18 return due date has been increased to March’19 due date of GSTR-1)
Section 17 - Apportionment of credit and blocked credits
(1) Where the goods or services or both are used by the registered person partly for the purpose of any business
and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is
attributable to the purposes of his business.
(2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies
including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for
effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax
as is attributable to the said taxable supplies including zero-rated supplies.
(3) The value of exempt supply under sub-section (2) shall be such as may be prescribed, and shall include
supplies on which the recipient is liable to paytax on reverse charge basis, transactions in securities, sale of land
and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
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Explanation— For the purposes of this sub-section, the expression “value of exempt supply” shall not include the
value of activities or transactions specified in Schedule III,except those specified in paragraph 5 of the said
Schedule;(mean’s Sale of Land and sale of building included in the value of exempt supply although it is not
supply of goods nor supply of service, said in above point no. 3 also)
(4) A banking companyor a financial institution including a non-banking financial company, engaged in supplying
services by way of accepting deposits, extending loans or advances shall have the option to either comply with
the provisions of sub-section (2), oravail of, every month, an amount equal to fifty percent of the eligible input tax
credit on inputs, capital goods and input services in that month and the rest shall lapse:
Provided that the option once exercised shall not be withdrawn during the remaining part of the financial year:
Provided further that the restriction of fifty percent shall not apply to the tax paid on supplies made by one
registered person to another registered person having the same Permanent Account Number.
(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub- section (1) of section 18, input
tax credit shall not be available in respect of the following, namely:—
(a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen
persons (including the driver)(to remember this, consider small vehicles are not eligible), except when they are
used for making the following taxable supplies, namely:—
(A) further supply of such motor vehicles; or (Maruti, hyundai, ford etc)
(B) transportation of passengers; or (Private taxi run by someone)
(C) imparting training on driving such motor vehicles; (cars used for Driving classes)
(aa) vessels and aircraft except when they are used––
(i) for making the following taxable supplies, namely:—
(A) further supply of such vessels or aircraft; or
(B) transportation of passengers; or (indigo airlines etc.)
(C) imparting training on navigating such vessels; or
(D) imparting training on flying such aircraft;
(ii) for transportation of goods;
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(ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles,
vessels or aircraft referred to in clause (a) or clause (aa):
Provided that the input tax credit in respect of such services shall be available—
(i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes
specified therein; (mean’s if these vehicles specified above, are used for those purposes on which ITC is allowed,
then their insurance, servicing, repair and maintenance ITC are also allowed)
(ii) where received by a taxable person engaged—
(I) in the manufacture of such motor vehicles, vessels or aircraft; or
(II) in the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him;
(b) the following supply of goods or services or both—
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing,
renting or hiring ofmotor vehicles, vessels or aircraft referred to in clause (a) or clause (aa)exceptwhen used for
the purposes specified therein, life insurance and health insurance:
Provided that the input tax credit in respect of such goods or services or both shall be available where an inward
supply of such goods or services or both is used by a registered person for making an outward taxable supply of
the same category of goods or services or both or as an element of a taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre; and
(iii) travel benefits extended to employees on vacation such as leave or home travel concession:
Provided that the input tax credit in respect of such goods or services or both shall be available, where it is
obligatory for an employer to provide the same to its employees under any law for the time being in force.
(c) works contract services when supplied for construction of an immovable property (other than plant and
machinery) except where it is an input service for further supply of works contract service; (ITC on work contract
services allowed only when taken for rendering outward work contract services)
(d) goods or services or both received by a taxable personfor construction of an immovable property (other than
plant or machinery) on his own account including when such goods or services or both are used in the course or
furtherance of business.
Explanation.––For the purposes of clauses (c) and (d), the expression “construction” includes re-construction,
renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;
(e) goods or services or both on which tax has been paid under section 10; (composite dealer)
(f) goods or services or both received by a non-resident taxable person except on goods imported by him; (IGST
paid on imports is allowed as ITC to NRTP)
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(g) goods or services or bothused for personal consumption;
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and
(i) any tax paid in accordance with the provisions of sections 74, 129 and 130.(Tax paid by way of penalty for
fraud with intension, moment of goods without E-way bill, moment of goods without invoice or delivery
challan)
(6) The Government may prescribe the manner in which the credit referred to in sub-sections (1) and (2) may be
attributed. (Rule 42, 43 prescribed for such attribution of ITC, Rule 42 for Input, IS and Rule 43 for CG)
Explanation.––For the purposes of this Chapter and Chapter VI(Registration), the expression “plant and
machinery” means apparatus, equipment, and machinery fixed to earth by foundation or structural support that
are used for making outward supply of goods or services or both and includes such foundation and structural
supports but excludes—
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises.
Section 18 - Availability of credit in special circumstances
(1) Subject to such conditions and restrictions as may be prescribed—
(a) a person who has applied for registration under this Act within thirty days from the date on which he becomes
liable to registration and has been granted such registration shall be entitled to take credit of input tax in respect
of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day
immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act;
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(b) a person who takes registration under sub-section (3) of section 25(on voluntary basis)shall be entitled to
take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods
held in stock on the day immediately preceding the date of grant of registration;
(c) where any registered person ceases to pay tax under section 10(Mean’s converted from composition dealer to
normal dealer), he shall be entitled to take credit of input tax in respect of inputs held in stock, inputs contained
in semi-finished or finished goods held in stock and on capital goods on the day immediately preceding the date
from which he becomes liable to pay tax under section 9(Mean’s from the date he becomes normal dealer):
Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed;
(d) where an exempt supply of goods or services or both by a registered person becomes a taxable supply, such
person shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-
finished or finished goods held in stock relatable to such exempt supply and on capital goods exclusively used for
such exempt supply on the day immediately preceding the date from which such supply becomes taxable:
Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed
(2) A registered person shall not be entitled to take input tax credit under sub-section (1) in respect of any supply
of goods or services or both to him after the expiry of one year from the date of issue of tax invoice relating to
such supply.
(3) Where there is a change in the constitution of a registered person on account of sale, merger, demerger,
amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said
registered person shall be allowed to transfer the input tax credit which remains unutilised in his electronic credit
ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be
prescribed. (Manner for such ITC availment has been specified under Rule 41 of CGST Rules 2017, refer Last
page for whole details)
(4) Where any registered person who has availed of input tax credit opts to pay tax under section 10or, where the
goods or services or both supplied by him become wholly exempt, he shall pay an amount, by way of debit in the
electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in
stock and inputs contained in semi-finished or finished goods held in stock and on capital goods, reduced by such
percentage points as may be prescribed, on the day immediately preceding the date of exercising of such
optionor, as the case may be, the date of such exemption:
Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic credit
ledger shall lapse.
(5) The amount of credit under sub-section (1) and the amount payable under sub-section (4) shall be calculated
in such manner as may be prescribed.
(6) In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the
registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and
machinery reduced by such percentage points as may be prescribed or the tax on the transaction value of such
capital goods or plant and machinery determined under section 15, whichever is higher: (Mean’s when CG or
P&M sold of then, ITC to be reversed after reducing by such points or Transaction value of such supply of CG or
P&M, whichever is higher)
Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person
may pay tax on the transaction value of such goods determined under section 15.
Section 19 - Taking input tax credit in respect of inputs and capital goods sent for job work
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(1) The principal shall, subject to such conditions and restrictions as may be prescribed, are allowed input tax
credit on inputs sent to a job worker for job work.
(2) Notwithstanding anything contained in clause (b) of sub-section (2) of section 16, the principal shall be entitled
to take credit of input tax on inputs even if the inputs are directly sent to a job worker for job work without being
first brought to his place of business.
(3) Where the inputs sent for job work are not received back by the principal after completion of job work or
otherwise or are not supplied from the place of business of the job worker in accordance with clause (a) or clause
(b) of sub-section (1) of section 143 within one year of being sent out, it shall be deemed that such inputs had
been supplied by the principal to the job worker on the day when the said inputs were sent out: (Mean’s if Input
not received within 1 year, then it is deemed supply from Principal and GST is to be pay by principal with
interest from the day he send such goods to job worker till it became deemed supply)
Provided that where the inputs are sent directly to a job worker, the period of one year shall be counted from the
date of receipt of inputs by the job worker.
(4) The principal shall, subject to such conditions and restrictions as may be prescribed, are allowed input tax
credit on capital goods sent to a job worker for job work.
(5) Notwithstanding anything contained in clause (b) of sub-section (2) of section 16, the principal shall be entitled
to take credit of input tax on capital goods even if the capital goods are directly sent to a job worker for job work
without being first brought to his place of business.
(6) Where the capital goods sent for job work are not received back by the principal within a period of three years
of being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker
on the day when the said capital goods were sent out:
Provided that where the capital goods are sent directly to a job worker, the period of three years shall be counted
from the date of receipt of capital goods by the job worker.
(7) Nothing contained in sub-section (3) or sub-section (6) shall apply to moulds and dies, jigs and fixtures, or tools
sent out to a job worker for job work.
Explanation.––For the purpose of this section, “principal” means the person referred to in section 143.
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Section 20 - Manner of distribution of credit by Input Service Distributor
(1) The Input Service Distributor shall distribute the credit of central tax as central tax or integrated tax and
integrated tax as integrated tax or central tax, by way of issue of a document containing the amount of input tax
credit being distributed in such manner as may be prescribed.
(2) The Input Service Distributor may distribute the credit subject to the following conditions, namely:––
(a) the credit can be distributed to the recipients of creditagainst a document containing such details as may be
prescribed;
(b) the amount of the credit distributed shall not exceed the amount of credit available for distribution;
(c) the credit of tax paid on input services attributable to a recipient of credit shall be distributed only to that
recipient;
(d) the credit of tax paid on input services attributable to more than one recipient of credit shall be distributed
amongst such recipients to whom the input service is attributable and such distribution shall be pro rata on the
basis of the turnover in a State or turnover in a Union territory of such recipient, during the relevant period, to
the aggregate of the turnover of all such recipients to whom such input service is attributable and which are
operational in the current year, during the said relevant period;
(e) the credit of tax paid on input services attributable to all recipients of credit shall be distributed amongst such
recipients and such distribution shall be pro rata on the basis of the turnover in a State or turnover in a Union
territory of such recipient, during the relevant period, to the aggregate of the turnover of all recipients and which
are operational in the current year, during the said relevant period.
Explanation.––For the purposes of this section,––
(a) the ―”relevant period” shall be––
(i) if the recipients of credit have turnover in their States or Union territories in the financial year preceding the
year during which credit is to be distributed, the said financial year; or
(ii) if some or all recipients of the credit do not have any turnover in their States or Union territories in the
financial year preceding the year during which the credit is to be distributed, the last quarter for which details of
such turnover of all the recipients are available, previous to the month during which credit is to be distributed;
(b) the expression “recipient of credit” means the supplier of goods or services or both having the same
Permanent Account Number as that of the Input Service Distributor;
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(c) the term “turnover”, in relation to any registered person engaged in the supply of taxable goods as well as
goods not taxable under this Act, means the value of turnover, reduced by the amount of any duty or tax levied
under entries 84 (Central Excise duty)and 92A(CST) of List I of the Seventh Schedule to the Constitution and
entries 51 (state Excise duty) and 54 (VAT)of List II of the said Schedule.
Section 21 - Manner of recovery of credit distributed in excess
Where the Input Service Distributor distributes the creditin contravention of the provisions contained in section
20 resulting in excess distribution of credit to one or more recipients of credit, the excess credit so distributed
shall be recovered from such recipients along with interest, and the provisions of section 73 or section 74, as the
case may be, shall, mutatis mutandis, apply for determination of amount to be recovered.
CHAPTER V of CGST Rules 2017 - INPUT TAX CREDIT
Rule 36 - Documentary requirements and conditions for claiming input tax credit
(1)The input tax credit shall be availed by a registered person, including the Input Service Distributor, on the basis
of any of the following documents, namely,-
(a) an invoice issued by the supplier of goods or services or both in accordance with the provisions of section 31;
(b) an invoice issued in accordance with the provisions of clause (f) of sub-section (3) of section 31, subject to the
payment of tax;
(c) a debit note issued by a supplier in accordance with the provisions of section 34;
(d) a bill of entry or any similar document prescribed under the Customs Act, 1962 or rules made thereunder for
the assessment of integrated tax on imports;
(e) an Input Service Distributor invoice or Input Service Distributor credit note or any document issued by an Input
Service Distributor in accordance with the provisions of sub-rule (1) of rule 54.
(2) Input tax credit shall be availed by a registered person only ifall the applicable particulars as specified in the
provisions of Chapter VI are contained in the said document, and the relevant information, as contained in the
said document, is furnished in FORM GSTR-2 by such person:
Provided that if the said document does not containall the specified particulars but contains the details of the
amount of tax charged, description of goods or services, total value of supply of goods or services or both, GSTIN
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of the supplier and recipient and place of supply in case of inter-State supply, input tax credit may be availed by
such registered person.
(3) No input tax credit shall be availed by a registered person in respect of any tax that has been paid in pursuance
of any order where any demand has been confirmed on account of any fraud, will ful misstatement or
suppression of facts.
(4) No input tax credit shall be availed by a registered person in respect of invoices or debit notes the details of
which are required to be furnished under subsection (1) of section 37 unless,-
(a) the details of such invoices or debit notes have been furnished by the supplier in the statement of outward
supplies in FORM GSTR-1 or using the invoice furnishing facility; and
(b) the details of such invoices or debit notes have been communicated to the registered person in FORM GSTR-
2B under sub-rule (7) of rule 60.
Rule 42:Apportionment and Reversal of ITC on inputs/input services
Let us understand this Rule in easy manner. For this we need to keep in mind few things
1. That’s this rule apply where both TAXABLE and EXEMPT supply are made;
2. There must be some common ITC which is used in both TAXABLE and EXEMPT supply
For this common ITC to be determine first,

Common ITC = ITC allowed u/s 16
(-) ITC ineligible u/s 17(5)
(-) ITC EXCLUSIVELY used for TAXABLE supplies
(-) ITC EXCLUSIVELY used for EXEMPT supplies
Then on monthly basis, we need to evaluate the common ITC portion of exempt supply which needs to be
reversed
Common ITC X Exempted Turnover = Provisional reversal of exempted supply (for each month)
Total Turnover
Then on Yearly basis, we need to evaluate the common ITC portion of exempt supply which should to be reversed
Common ITC X Exempted Turnover = Provisional reversal of exempted supply (for whole year)
Total Turnover
After completion of the whole year, this need to evaluate whether the reversal made each month is short or in
excessive, So, after evaluation both the total’s in monthly and yearly case,
If Final Reversal > Total of Provisional Reversals Then, Further reversals is to be made along with
Interest @ 18% P.A. from 1st April till date of
such reversals.
If Final Reversal < Total of Provisional Reversals Then, re-avail the ITC, before due date of Sep
month return or annual return, whichever is
earlier.
Illustration 1:
Consider the following scenario for the month of July, 2021 in relation to supplies made in Karnataka:
Total ITC available (T) = Rs. 1,50,000;
ITC on inputs attributable to supply used by Director for personal use (T1) : Rs. 7,500;
ITC on inputs to be used exclusively for making exempt supply (T2) : Rs. 15,000;
Blocked credits (for example, GST portion paid in respect of taxi service obtained) (T3) : Rs. 4,500;
ITC on inputs used exclusively for making taxable supplies (T4) : Rs. 1,05,000;
Aggregate value of exempt supplies made in July (E) : Rs. 2,25,000;
Total turnover in Karnataka (F) : Rs. 30,00,000;
Solution:
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C1 = T – (T1+T2+T3); C1 = 1,50,000 – (7,500+15,000+4,500)

Therefore, C1 = 1,23,000
The common credit C2 = C1 – T4 , i.e., C2 = 1,23,000-1,05,000 , i.e., C2 = 18,000
D1 = (E÷F) × C2 , i.e., D1 = (2,25,000 ÷ 30,00,000) × 18,000 , i.e., D1 = 1,350
D2 = 5% of C2 , i.e., D2 = 900
C3 = C2 – (D1 + D2) , i.e., C3 = 15,750
So, out of the originally available ITC of Rs. 1,50,000, only C3 (Rs. 15,750) and T4 (Rs. 1,05,000) were credited
ultimately to the electronic credit ledger and D1 (Rs. 1,350) and D2 (Rs. 900) were required to be reversed.
Illustration 2:
PQR Ltd., a registered supplier, supplies taxable as well as exempted goods. Details of turnover of supply of goods
during the month of August, 2020 includes
Particulars Amount
Value of Taxable Supply of Goods (including zero-rated supply of goods) 55,00,000
Value of Supply of Exempted Goods (exempted supplies) 10,00,000
Value of out of Scope Supply (Transaction in Security) 10,00,000
Total 75,00,000
Details of Input tax credit for the month of August, 2020 are as under:
CGST SGST IGST
Particulars
(Rs.) (Rs.) (Rs.)
Total ITC available 1,80,000 1,80,000 2,16,000
The above ITC on input / input services includes the following
Credit on input goods/services exclusively used for supplying goods for

22,500 22,500 60,000
personal use
Credit on input goods/services exclusively used for supplying exempted

45,000 45,000 72,000
goods
Credit availed on input/input services which are ineligible under Section

42,000 42,000 48,000
17(5)
Credit on input/input services exclusively used for supplying taxable goods

63,000 63,000 23,400
(including Zero rated supplies)
Determine the ITC entitlement of PQR Ltd. for month of August, 2020 and also determine the amount, if any, to
be added to output tax liability of PQR Ltd. during August, 2020.
Solution: Computation of ITC eligible for the tax period August, 2020
CGST SGST IGST
Particulars
(Rs.) (Rs.) (Rs.)
Total Input tax credit in tax period [T] 1,80,000 1,80,000 2,16,000
(-)ITC exclusively related to non-business supply [T1] 22,500 22,500 60,000
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(-)ITC exclusively related to exempted supply [T2] 45,000 45,000 72,000
(-)Blocked ITC [T3] 42,000 42,000 48,000
Input tax credit credited to the E- ledger [C1]

70,500 70,500 36,000
C1 = T – [T1 + T2 + T3]
(-)ITC exclusively related to taxable supply (including zero-rated supplies)[T4] 63,000 63,000 23,400
Common credit of input and input services used for providing supply of
services [C2] 7,500 7,500 12,600
C2 = C1 – T4
Ineligible Common Credit (determined as per Rule 42)
Common credit related to non-business (deemed 5% of C2)[D2] 375 375 630
Common credit related to exempted supplies (Common Credit * Exempted

2,000 2,000 3,360
TO=20,00,000 / Aggregate TO = 75,00,000)[D1]
Net eligible common credit

5,125 5,125 8,610
C3 = C2 – [D1 + D2]
Total credit eligible i.e. [T4 + C3] 68,125 68,125 32,010
Amount to be added to output tax liability 2,375 2,375 3,990
Rule 43: Apportionment and Reversal of ITC on capital goods
Same as in Rule 42 above, we have to reach to common ITC first, just the difference is such ITC is of Capital
goods. So, we perform the same task as above
Common ITC of Capital Goods = ITC of Capital goods allowed u/s 16

(-) ITC of Capital goods ineligible u/s 17(5)
(-) ITC of Capital goods EXCLUSIVELY used for TAXABLE supplies
(-) ITC of Capital goods EXCLUSIVELY used for EXEMPT supplies
Here, it is assumed that the life of every capital goods is 60 Months (i.e. 5 years)
Accordingly, we divide the ITC of commonly used Capital goods by 60, although we are eligible to take full
ITC, so we take full ITC and certain reversals each month’s up to 60 months
ITC Attributable to each month = Total common ITC = ITC for each month
60
Out of which, depend upon proportion of exempt and taxable supply, we will reverse the ITC per month of Exempt
supply portion each month depending upon turnover each month.
Let we understand better with the following examples
Illustration 1:
A company operating in Karnataka had availed the following ITC on various capital goods purchased in the month
of July, 2020:
ITC on Machine A (used exclusively in supply of exempt goods) : Rs. 1,50,000
ITC on Machine B (used exclusively in supply of taxable goods) : Rs. 9,00,000
ITC on Machine C (used exclusively for non-business purposes) : Rs. 20,000
ITC on Machine D (used partly in supply of taxable and exempt goods) : Rs. 4,50,000
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The company had also made the following type of output supplies in Karnataka in the month of July 2020:
Turnover in relation to exempt supplies : Rs. 20,00,000
Turnover in relation to taxable supplies : Rs. 80,00,000
Solution:
ITC on machine A and C will not be credited to the electronic credit ledger (1,50,000+20,000 = 1,70,000).
ITC on machine B will be credited to the electronic ledger: Rs. 9,00,000
ITC on machine D will also be credited to the electronic credit ledger:
Tc = 4,50,000
Tm = Tc ÷ 60 = 7,500 which is also Tr in this case.
The amount of ITC to be reversed for the month of July, 2020 would be: = (E ÷ F) × Tr = (20,00,000 ÷ 1,00,00,000)
× 7,500 = 1,500
Thus, total ITC credited to electronic ledger for the month of July, 2020 = Rs. 9,00,000 + 4,50,000 and total ITC
reversed for the month of July, 2020 = Rs. 1,500
Illustration 2:
Mr. M, a manufacturer engaged in supplying exempted as well as taxable goods. On 25th September, 2011 he
purchased capital goods on which IGST paid Rs. 72,000, which were used for making exempted supplies.
On 10th April, 2012 he used such capital Goods for purpose of supplying both Taxable as well as exempted
supplies (i.e., partly for taxable and partly for exempted supplies). Determine implication on ITC.
Solution:
As per Rule 43 of CGST Rules, 2017, where any capital goods earlier used for exempted supplies are subsequently
used for providing taxable supplies also, then the eligible input tax credit shall be arrived at by reducing the input
tax at the rate of 5% points for every quarter or part thereof i.e. Rs. 57,600 (Rs. 72,000 – (5% × 4 quarters × Rs.
72,000) shall be credited to the electronic credit ledger.
Amount of input tax credit attributable to April, 2012 on common capital goods during their useful life = (Rs.
57,600 / 60 i.e. Rs. 960).
[Note: As per Section 2(92), “quarter” shall mean a period comprising three consecutive calendar months, ending
on the last day of March, June, September and December of a calendar year. Here, 4 quarters taken as the
Quarter ending on September 2011, December 2011, March 2012 and quarter beginning from April 2012.]
Illustration 3:
SNP Pvt. Ltd., Coimbatore manufactures and sells product ‘Z’ which is exempt from GST. The company sells ‘Z’
only within Tamil Nadu. The turnover of the company in the previous year was Rs. 55 lakh. The company expects
the sales to grow by 20% in the current year. Owing to the growing demand for the product, the company
decided to increase its production capacity and purchased additional machinery for manufacturing ‘Z’ on
01.07.2011. The purchase price of the capital goods was Rs. 20 lakh exclusive of GST @ 18%.
However, effective from 01.11.2011, exemption available on ‘Z’ was withdrawn by the Central Government and
GST @ 12% was imposed thereon. The turnover of the company for the half year ended on 30.09.2011 was Rs. 40
lakh.
The Board of Directors of SNP Pvt. Ltd. wants to know whether SNP Pvt. Ltd. is already registered with respect to
certain taxable supplies being made by it along with manufacture of exempt product ‘Z’, other facts remaining the
same, can it take input tax credit on additional machinery purchased exclusively for manufacturing ‘Z’? If yes,
then how much credit can be availed?
Advice SNP Pvt. Ltd. on the above issues with reference to the provisions of GST law.
Solution:
Rule 43(1)(a) of the CGST Rules, 2017 disallows input tax credit on capital goods used or intended to be used
exclusively for effecting exempt supplies.
However, as per section 18(1)(d) of the CGST Act, 2017, where an exempt supply of goods and/or services by a
registered person becomes a taxable supply, such person gets entitled to take credit of input tax in respect of
inputs held in stock and inputs contained in semi-finished or finished goods held in stock and on capital goods
exclusively used for such exempt supply on the day immediately preceding the date from which such supply
becomes taxable.
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Rule 40(1)(a) of the CGST Rules, 2017 lays down that the credit on capital goods can be claimed after reducing the
tax paid on such capital goods by 5% per quarter of a year or part thereof from the date of the invoice.
Therefore, in the given case, SNP Pvt. Ltd. could not claim credit on machinery till the time the supply of product
‘Z’ for which said machinery was being used was exempt. However, it can claim credit from 31.10.2011 – the day
immediately preceding the date from which the supply of product ‘Z’ became taxable (01.11.2011).
The credit will be available for the remaining useful life of the machinery and will be computed as follows:
Date of purchase of machinery 01.07.2011
Date on which credit becomes eligible 31.10.2011
Number of quarters for which credit is to be reduced 2 (including part of quarter)
GST paid on machinery [Rs. 20,00,000 x 18%] Rs. 3,60,000
Credit to be reduced [Rs. 3,60,000 x 5% x 2] Rs. 36,000
Amount of credit that can be taken [Rs. 3,60,000 – Rs. 36,000] Rs. 3,24,000
Rule 41A - Transfer of credit on obtaining separate registration for multiple places of business within a State or
Union territory
(1) A registered person who has obtained separate registration for multiple places of business in accordance with
the provisions of rule 11 and who intends to transfer, either wholly or partly, the unutilised input tax credit lying
in his electronic credit ledger to any or all of the newly registered place of business, shall furnish within a period
of thirty days from obtaining such separate registrations, the details in FORM GST ITC-02A electronically on the
common portal, either directly or through a Facilitation Centre notified in this behalf by the Commissioner:
Provided that the input tax credit shall be transferred to the newly registered entities in the ratio of the value of
assets held by them at the time of registration.
Explanation.- For the purposes of this sub-rule, it is hereby clarified that the “value of assets” means the value of
the entire assets of the business whether or not input tax credit has been availed thereon.
(2) The newly registered person (transferee) shall, on the common portal, accept the details so furnished by the
registered person (transferor) and, upon such acceptance, the unutilised input tax credit specified in FORM GST
ITC-02A shall be credited to his electronic credit ledger.
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CHAPTER VI of CGST Act 2017 - REGISTRATION
Section 22 - Persons liable for registration
(1) Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special
category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a
financial year exceeds twenty lakh rupees:
Provided that where such person makes taxable supplies of goods or services or both from any of the special
category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh
rupees:
Provided further that the Government may, at the request of a special category State and on the recommendations
of the Council, enhance the aggregate turnover referred to in the first proviso from ten lakh rupees to such amount,
not exceeding twenty lakh rupees and subject to such conditions and limitations, as may be so notified:
Provided also that the Government may, at the request of a State and on the recommendations of the Council,
enhance the aggregate turnover from twenty lakh rupees to such amount not exceeding forty lakh rupees in case of
supplier who is engaged exclusively in the supply of goods, subject to such conditions and limitations, as may be
notified:
Explanation.––For the purposes of this sub-section, a person shall be considered to be engaged exclusively in the
supply of goods even if he is engaged in exempt supply of services provided by way of extending deposits, loans or
advances in so far as the consideration is represented by way of interest or discount.
(2) Every person who, on the day immediately preceding the appointed day(1st July 2017), is registered or holds a
licence under an existing law, shall be liable to be registered under this Act with effect from the appointed day.
(3) Where a business carried on by a taxable person registered under this Act is transferred, whether on account of
succession or otherwise, to another person as a going concern, the transferee or the successor, as the case may be,
shall be liable to be registered with effect from the date of such transfer or succession.
(4) Notwithstanding anything contained in sub-sections (1) and (3), in a case of transfer pursuant to sanction of a
scheme or an arrangement for amalgamation or, as the case may be, demerger of two or more companies pursuant
to an order of a High Court, Tribunal or otherwise, the transferee shall be liable to be registered, with effect from
the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the
High Court or Tribunal.
Explanation.––For the purposes of this section,––
(i) the expression “aggregate turnover” shall include all supplies made by the taxable person, whether on his own
account or made on behalf of all his principals;
(ii) the supply of goods, after completion of job work, by a registered job worker shall be treated as the supply of
goods by the principal referred to in section 143, and the value of such goods shall not be included in the aggregate
turnover of the registered job worker;
(iii) the expression “special category States” shall mean the States as specified in sub-clause (g) of clause (4) of
article 279A of the Constitution except the State of Jammu and Kashmir and States of Arunachal Pradesh, Assam,
Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand. (J&K not included under the limit of 10 Lakhs for
registration chapter purposes)
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Section 23 - Persons not liable for registration
(1) The following persons shall not be liable to registration, namely:––
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax
or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.
(2) The Government may, on the recommendations of the Council, by notification, specify the category of persons
who may be exempted from obtaining registration under this Act.
Following are few specified by the government:-

• Person making only supplies following under RCM (N/N 5/2017 CT dated 19/06/2017);
• Casual taxable person dealing in supply of Handicraft goods (N/N 32/2017 CT dated 15/09/2017);
• Inter-state supply of services (only upto limit u/s 22)
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Section 24 - Compulsory registration in certain cases
Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be
required to be registered under this Act,––
(i) persons making any inter-State taxable supply;
(ii) casual taxable persons making taxable supply;
(iii) persons who are required to pay tax under reverse charge;
(iv) person who are required to pay tax under sub-section (5) of section 9; (ECO like OLA, Uber, urban clap)
(v) non-resident taxable persons making taxable supply;
(vi) persons who are required to deduct tax under section 51, whether or not separately registered under this Act;
(TDS deductor)
(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as
an agent or otherwise;(Agent need separate registration, rather than Principal)
(viii) Input Service Distributor, whether or not separately registered under this Act; (for distribution of ITC on
inward services)
(ix) persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9,
through such electronic commerce operator who is required to collect tax at source under section 52(Supplier
supplying through Flipkart, Amazon);
(x) every electronic commerce operator, who is required to collect tax at source under section 52 (Flipkart,
Amazon);
(xi) every person supplying online information and database access or retrieval services(OIDAR services) from a
place outside India to a person in India, other than a registered person; and (Dropbox USA providing services in
India, Dropbox USA need to register itself in India via a person as authorised representative on its behalf in
India)
(xii) such other person or class of persons as may be notified by the Government on the recommendations of the
Council.
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ECO
(E-commerce
operator)
ECO who is liable u/s

Who require to collect Other ECO (which
9(5) of CGST Act 2017
TCS u/s 52 of CGST Act having their own
(Like OLA,UBER, Urban
2017 (Like Flipkart, website to sell)
Clap)
Amazon)
ECO need mandatory ECO need mandatory

registration u/s 24 ECO need registration
registration u/s 24
only if covered u/s 22
Supplier need not

require registration, Also, Supplier need
even if threshold mandatory
crosses as ECO is liable registration u/s 24
to pay GST
Section 25 - Procedure for registration
(1) Every person who is liable to be registered under section 22 or section 24 shall apply for registration in
everysuch State or Union territory in which he is so liable within thirty days from the date on which he becomes
liable to registration, in such manner and subject to such conditions as may be prescribed:
Provided that a casual taxable personor a non-resident taxable person shall apply for registration at least five days
prior to the commencement of business:
Provided further that a person having a unit, as defined in the Special Economic Zones Act, 2005, in a Special
Economic Zoneor being a Special Economic Zone developer shall have to apply for a separate registration, as
distinct from his place of business located outside the Special Economic Zone in the same State or Union territory.
(1 unit in SEZ (noida) and 1 unit in Ghaziabad need different registrations)
Explanation.—Every person who makes a supply from the territorial waters of India shall obtain registration in the
coastal State or Union territory where the nearest point of the appropriate baseline is located.
(2) A person seeking registration under this Act shall be granted a single registration in aState or Union territory:
Provided that a person having multiple places of business in aState or Union territory may be granted a separate
registration for each such place of business, subject to such conditions as may be prescribed. (Condition is that all
units in single state must have different business verticals, like 1 unit of Delhi deals in shoes, 2 unit of Delhi
deals in clothes, etc)
(3) A person, though not liable to be registered under section 22orsection 24may get himself registered voluntarily,
and all provisions of this Act, as are applicable to a registered person, shall apply to such person.
(4) A person who has obtainedoris required to obtain more than one registration, whether in one State or Union
territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct
persons for the purposes of this Act.
(5) Where a person who has obtained or is required to obtain registration in a State or Union territory in respect of
an establishment, has an establishment in another State or Union territory, then such establishments shall be treated
as establishments of distinct persons for the purposes of this Act.
(6) Every person shall have a Permanent Account Number issued under the Income- tax Act, 1961 in order to be
eligible for grant of registration:
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Provided that a person required to deduct tax under section 51may have, in lieu of a Permanent Account Number, a
Tax Deduction and Collection Account Number issued under the said Act in order to be eligible for grant of
registration. (TDS deductor or TCS collector can use TAN instead of PAN for registration purposes)
(6A) Everyregistered person shall undergo authentication, or furnish proof of possession of Aadhaar number, in
such form and manner and within such time as may be prescribed:
Provided thatif an Aadhar number is not assigned to the registered person, such person shall be offered alternate
and viable means of identification in such manner as Government may, on the recommendations of the Council,
prescribe(As aadhar is only for individuals, so in case GSTIN is of other than individuals, other ways of
authentication also prescribed):
Provided further that in case of failure to undergo authentication or furnish proof of possession of Aadhaar number
or furnish alternate and viable means of identification, registration allotted to such person shall be deemed to be
invalid and the other provisions of this Act shall apply as if such person does not have a registration.
(6B) On and from the date of notification, every individual shall, in order to be eligible for grant of registration,
undergo authentication, or furnish proof of possession of Aadhaar number, in such manner as the Government may,
on the recommendations of the Council, specify in the said notification:
Provided that if an Aadhaar number is not assigned to an individual, such individual shall be offered alternate and
viable means of identification in such manner as the Government may, on the recommendations of the Council,
specify in the said notification.
(6C) On and from the date of notification, every person, other than an individual, shall, in order to be eligible for
grant of registration, undergo authentication, or furnish proof of possession of Aadhaar number of the Karta,
Managing Director, whole time Director, such number of partners, Members of Managing Committee of
Association, Board of Trustees, authorised representative, authorised signatory and such other class of persons, in
such manner, as the Government may, on the recommendations of the Council, specify in the said notification:
Provided that where such person or class of persons have not been assigned the Aadhaar Number, such person or
class of persons shall be offered alternate(E-KYC) and viable means of identification in such manner as the
Government may, on the recommendations of the Council, specify in the said notification.
(6D) the provisions of sub-section (6A) or sub-section (6B) or sub-section (6C) shall not apply to such person or
class of persons or any State or Union territory or part thereof, as the Government may, on the recommendations of
the Council, specify by notification.
Explanation.—For the purposes of this section, the expression “Aadhaar number” shall have the same meaning as
assigned to it in clause (a) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies,
Benefits and Services) Act, 2016.
(7) Notwithstanding anything contained in sub-section (6), a non-resident taxable person may be granted
registration under sub-section (1) on the basis of such other documents as may be prescribed. (other documents
like passports etc can be used instead of PAN, Aadhar)
(8) Where a person who is liable to be registered under this Act fails to obtain registration, the proper officermay,
without prejudice to any action which may be taken under this Act or under any other law for the time being in
force, proceed to register such person in such manner as may be prescribed.
(9) Notwithstanding anything contained in sub-section (1),––
(a) any specialised agency of the United Nations Organisation or any Multilateral Financial Institution and
Organisation notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of
foreign countries; and
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(b) any other person or class of persons, as may be notified by the Commissioner,
shall be granted a Unique Identity Number in such manner and for such purposes, includingrefund of taxes on the
notified supplies of goods or services or both received by them, as may be prescribed.
(10) The registration or the Unique Identity Number shall be granted or rejected after due verification in such
manner and within such period as may be prescribed.
(11) A certificate of registration shall be issued in such form and with effect from such date as may be prescribed.
(12) A registration or a Unique Identity Number shall be deemed to have been granted after the expiry of the period
prescribed under sub-section (10), if no deficiency has been communicated to the applicant within that period.
Section 26 - Deemed registration
(1) The grant of registration or the Unique Identity Number under the State Goods and Services Tax Act or the
Union Territory Goods and Services Tax Act shall be deemed to be a grant of registration or the Unique Identity
Number under this Act subject to the condition that the application for registration or the Unique Identity Number
has not been rejected under this Act within the time specified in sub-section (10) of section 25. (Application for
registration accepted under CGST Act deemed as accepted under SGST or UTGST Act and vise-versa)
(2) Notwithstanding anything contained in sub-section (10) of section 25, any rejection of application for
registration or the Unique Identity Number under the State Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act shall be deemed to be a rejection of application for registration under this Act.
(Application for registration rejected under CGST Act deemed to be rejected under SGST or UTGST Act and
vise-versa)
Section 27 - Special provisions relating to casual taxable person and non-resident taxable person
(1) The certificate of registration issued to a casual taxable personor a non- resident taxable person shall be valid
for the period specified in the application for registration or ninety days from the effective date of registration,
whichever is earlier and such person shall make taxable supplies only after the issuance of the certificate of
registration:
Provided that the proper officer may, on sufficient cause being shown by the said taxable person, extend the said
period of ninety days by a further period not exceeding ninety days.
(2) A casual taxable personor a non-resident taxable person shall, at the time of submission of application for
registration under sub-section (1) of section 25, make an advance deposit of tax in an amount equivalent to the
estimated tax liability of such person for the period for which the registration is sought:
Provided that where any extension of time is sought under sub-section (1), such taxable person shall deposit an
additional amount of tax equivalent to the estimated tax liability of such person for the period for which the
extension is sought.
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(3) The amount deposited under sub-section (2) shall be credited to the electronic cash ledger of such person and
shall be utilised in the manner provided under section 49.
Section 28 - Amendment of registration
(1) Every registered person and a person to whom a Unique Identity Number has been assigned shall inform the
proper officer of any changes in the information furnished at the time of registration or subsequent there to, in such
form and manner and within such period as may be prescribed.
(2) The proper officermay, on the basis of information furnished under sub-section (1) or as ascertained by him,
approve or reject amendments in the registration particulars in such manner and within such period as may be
prescribed:
Provided that approval of the proper officer shall not be required in respect of amendment of such particulars as
may be prescribed:
Provided further that the proper officer shall not reject the application for amendment in the registration particulars
without giving the person an opportunity of being heard.
(3) Any rejection or approval of amendments under the State Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act, as the case may be, shall be deemed to be a rejection or approval under this Act.
Section 29 - Cancellation or suspension of registration
(1) The proper officer may, either on his own motion or on an application filed by the registered personor by his
legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may
be prescribed, having regard to the circumstances where,–
(a) the business has been discontinued, transferred fully for any reason including death of the proprietor,
amalgamated with other legal entity, demerged or otherwise disposed of; or
(b) there is any change in the constitution of the business; or
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(c) the taxable person is no longer liable to be registered under section 22 or section 24 or intends to optout of the
registration voluntarily made under sub-section (3) of section 25.
Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered
person, the registration may be suspended for such period and in such manner as may be prescribed.
(2) The proper officermaycancel the registration of a person from such date, including any retrospective date, as he
may deem fit, where,––
(a) a registered person has contravened such provisions of the Act or the rules made there under as may be
prescribed; or
(b) a person paying tax under section 10 has not furnished returns for three consecutive tax periods(means of 9
months); or
(c) any registered person, other than a person specified in clause (b), has not furnished returns for a continuous
period of six months; or
(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced
business within six months from the date of registration; or
(e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:
Provided that the proper officershall not cancel the registration without giving the person an opportunity of being
heard:
Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer
may suspend the registration for such period and in such manner as may be prescribed.
(3) The cancellation of registration under this section shall not affect the liability of the person to pay tax and other
dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior
to the date of cancellation whether or not such tax and other dues are determined before or after the date of
cancellation.
(4) The cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and
Services Tax Act, as the case may be, shall be deemed to be a cancellation of registration under this Act.
(5) Every registered person whose registration is cancelled shall pay an amount, by way of debit in the electronic
credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and
inputs contained in semi-finished or finished goods held in stock orcapital goods or plant and machinery on the day
immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher,
calculated in such manner as may be prescribed:
Provided that in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the
input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may
be prescribed or the tax on the transaction value of such capital goods or plant and machinery under section 15,
whichever is higher.
(6) The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed.
Section 30 - Revocation of cancellation of registration
(1) Subject to such conditions as may be prescribed, any registered person, whose registration is cancelled by the
proper officer on his own motion, may apply to such officer for revocation of cancellation of the registration in the
prescribed manner within thirty days from the date of service of the cancellation order.
Provided that such period may, on sufficient cause being shown, and for reasons to be recorded in writing, be
extended,—
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(a) by the Additional Commissioner or the Joint Commissioner, as the case may be, for a period not exceeding
thirty days;
(b) by the Commissioner, for a further period not exceeding thirty days, beyond the period specified in clause (a).
(2) The proper officer may, in such manner and within such period as may be prescribed, by order, either revoke
cancellation of the registration or reject the application:
Provided that the application for revocation of cancellation of registration shall not be rejected unless the applicant
has been given an opportunity of being heard.
(3) The revocation of cancellation of registration under the State Goods and Services Tax Act or the Union
Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a revocation of cancellation of
registration under this Act.
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CHAPTER VII of CGST Act 2017 - TAX INVOICE, CREDIT AND DEBIT NOTES
Section 31 - Tax invoice
(1) A registered person supplying taxable goods shall, beforeorat the time of,—
(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or
(b) delivery of goods or making available thereof to the recipient, in any other case(For Example - Lift installed at
site and made available for usage by the recipient),
issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other
particulars as may be prescribed:
Section 2(96) defines “removal” inrelation to goods, means

(a) despatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of
such supplier (Mean’s despatch at transport, and send bilty to recipient); or
(b) collection of the goods by the recipient thereof or by any other person acting on behalf of such
recipient (counter Sale at shops);
Provided that the Government may, on the recommendations of the Council, by notification, specify the categories
of goods or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may
be prescribed.
(2) A registered person supplying taxable services shall, before or after the provision (rendering)of service but
within a prescribed period, issue a tax invoice, showing the description, value, tax charged there on and such other
particulars as may be prescribed: (In Rule 47 of CGST Rules 2017, In case of services, Tax Invoice to be issued
BEFORE or WITHIN 30 DAYS after providing services, 45 days in case of Banking co, Insurance co, FI,
NBFC etc. – Refer Rule 47 in last page)
Provided that the Government may, on the recommendations of the Council, by notification,—
(a) specify the categories of services or supplies in respect of which a tax invoice shall be issued, within such time
and in such manner as may be prescribed;
(b) subject to the condition mentioned therein, specify the categories of services in respect of which—
(i) any other document issued in relation to the supply shall be deemed to be a tax invoice; or
(ii) tax invoice may not be issued
(3) Notwithstanding anything contained in sub-sections (1) and (2)––
(a) a registered personmay, within one month from the date of issuance of certificate of registration and in such
manner as may be prescribed, issue a revised invoice against the invoice already issued during the period beginning
with the effective date of registration till the date of issuance of certificate of registration to him;
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(b) a registered person may not issue a tax invoice if the value of the goods or services or both supplied is less
than two hundred rupees subject to such conditions and in such manner as may be prescribed (Condition is that
if supplied to Registered person, then even value < 200, then also separate invoice need to be issue, because he
need to take ITC);
(c) a registered person supplying exempted goods or services or both orpaying tax under the provisions of section
10shallissue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be
prescribed:
Provided that the registered personmaynot issue a bill of supply if the value of the goods or services or both
supplied is less than two hundred rupees subject to such conditions and in such manner as may be
prescribed(Condition is that a single invoice need to be issue for the exempted supplies of whole day);
(d) a registered person shall, on receipt of advance payment with respect to any supply of goods or services or both,
issue a receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt
of such payment;
(e) where, on receipt of advance payment with respect to any supply of goods or services or both the registered
person issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance
thereof, the said registered person may issue to the person who had made the payment, a refund voucher against
(This note is for guidance purpose only; GST on advances in case of goods has been exempted via N/N
66/2017 under Time of supply provisions, but applicable in case of advance for services. It’s better to issue Tax
Invoice also with receipt voucher as section 31(2) allow to issue Tax Invoice before providing services also, as it
became beneficial for taxpayer to issue credit note, if no services has been render further instead of claiming
refund from department if Tax invoice also issued with receipt voucher)
such payment;
(f) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9(RCM) shall
issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on
the date of receipt of goods or services or both(Called as SELF-INVOICING);
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(g) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue a
payment voucher at the time of making payment to the supplier.
Under section 31(3)(f) and 31(3)(g) above, time of issue of Self invoicing and payment voucher is different,
as self-invoicing is to be made when goods/services received under section 9(3) or 9(4), although, payment
voucher is issue d when payment will be made to the supplier.
(4) In case of continuous supply of goods, where successive statements of accounts or successive payments are
involved, the invoice shall be issued before or at the timeeach such statement is issued or, as the case may be, each
such payment is received.(Like - newspaper dispatched within the month, would be charged at the month end via
statement)
(5) Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of services,––
(a) where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the
due date of payment;(here, payment due date is to be consider for issue of Tax Invoice)
(b) where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the
time when the supplier of service receives the payment; (here, payment receive or to be receive is to be consider for
issue of Tax Invoice)
(c) where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of
completion of that event. (here, completion of event is to be consider for issue of Tax Invoice, like 5 floors to be
made by builder and payment will be made @ 20% on each floor completion)
(6) In a case where the supply of services ceases under a contract before the completion of the supply, the invoice
shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the supply made
before such cessation.
(7) Notwithstanding anything contained in sub-section (1), where the goods being sent or taken on approval for sale
or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or
six months from the date of removal, whichever is earlier.
Explanation.––For the purposes of this section, the expression “tax invoice” shall include any revised invoice
issued by the supplier in respect of a supply made earlier.
Section 31A - Facility of digital payment to recipient (Inserted by Finance (No.2) Act 2019 – w.e.f 01.01.2020)
(1) The Government may, on the recommendations of the Council, prescribe a class of registered persons who shall
provide prescribed modes of electronic payment to the recipient of supply of goods or services or both made by
him and give option to such recipient to make payment accordingly, in such manner and subject to such conditions
and restrictions, as may be prescribed.(For some notified class of persons give option to recipient to made
payment via digital payments, this is to curve the black money transactions as payment received other than
cash cannot be escaped easily)
Section 32 - Prohibition of unauthorised collection of tax
(1) A person who is not a registered person shall not collect in respect of any supply of goods or services or both
any amount by way of tax under this Act. (Unregistered Person cannot collect GST)
(2) No registered person shall collect tax except in accordance with the provisions of this Act or the rules made
there under. (Registered Person can collect GST only as per the provisions under CGST Act)
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Section 33 - Amount of tax to be indicated in tax invoice and other documents
Notwithstanding anything contained in this Act or any other law for the time being in force, where any supply is
made for a consideration, every person who is liable to pay tax for such supply shall prominently indicate in all
documents relating to assessment, tax invoice and other like documents, the amount of tax which shall form part of
the price at which such supply is made.
Section 34 - Credit and debit notes
(1) Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable
value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such
supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are
found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the
recipient one or more credit notes for supplies made in a financial year containing such particulars as may be
prescribed.
(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare
the details of such credit note in the return for the month during which such credit note has been issued but not later
than September following the end of the financial year in which such supply was made, or the date of furnishing of
the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be
prescribed:
Provided thatno reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and
interest on such supply has been passed on to any other person.
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(3) Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable
value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such
supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient one or
more debit notes for supplies made in a financial year containing such particulars as may be prescribed.
(4) Any registered person who issues a debit note in relation to a supply of goods or services or both shall declare
the details of such debit note in the return for the month during which such debit note has been issued and the tax
liability shall be adjusted in such manner as may be prescribed.
Explanation.––For the purposes of this Act, the expression “debit note” shall include a supplementary invoice
To remember the time period of credit note issue and debit note issue, we should keep in mind the revenue of
government, as by credit note, output tax liability decreases which results decrease in government revenue, so
it’s time to issue is restricted up to Sep month return or annual return, whichever is earlier.
Although, via debit note, revenue of government will increase as output tax liability got increased so no time
period restriction imposed in this case.
Also, need to remember that if debit note issued after September month return or Annual return, which is
allowed, then ITC of such invoice can’t be claim by the recipient as its got time barred u/s 16(4) of CGST Act
2017
Both such documents need to be issued by the supplier only, recipient can make request to the supplier for such
debit or credit note as the case may be.
CHAPTER VI of CGST Rules 2017 - TAX INVOICE, CREDIT AND DEBIT NOTES
Rule 46 - Tax invoice
Subject to rule 54(Rules for Tax Invoice for ISD), a tax invoice referred to in section 31 shall be issued by the
registered person containing the following particulars, namely,-
(a) name, address and Goods and Services Tax Identification Number of the supplier;
(b) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or
numerals or special characters- hyphen or dash and slash symbolised as “-” and “/” respectively, and any
combination thereof, unique for a financial year;
(c) date of its issue;
(d) name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of
the recipient;
(e) name and address of the recipient and the address of delivery, along with the name of the State and its code, if
such recipient is un-registered and where the value of the taxable supply is fifty thousand rupees or more;
(f) name and address of the recipient and the address of delivery, along with the name of the State and its code, if
such recipient is un-registered and where the value of the taxable supply is less than fifty thousand rupees and the
recipient requests that such details be recorded in the tax invoice;
(g) Harmonised System of Nomenclature code for goods or services;
(h) description of goods or services;
(i) quantity in case of goods and unit or Unique Quantity Code thereof;
(j) total value of supply of goods or services or both;
(k) taxable value of the supply of goods or services or both taking into account discount or abatement, if any;
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(l) rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
(m) amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union
territory tax or cess);
(n) place of supply along with the name of the State, in the case of a supply in the course of inter-State trade or
commerce;
(o) address of delivery where the same is different from the place of supply;
(p) whether the tax is payable on reverse charge basis; and
(q) signature or digital signature of the supplier or his authorised representative:
(r) Quick Response code, having embedded Invoice Reference Number (IRN) in it, in case invoice has been issued
in the manner prescribed under sub-rule (4) of rule 48.
Provided that the Board may, on the recommendations of the Council, by notification, specify-
(i) the number of digits of Harmonised System of Nomenclature code for goods or services that a class of registered
persons shall be required to mention; or (Now 4 digit for turnover < 5 cr and 6 digit for turnover > 5 cr )
(ii) a class of supply of goods or services for which specified number of digits of Harmonised System of
Nomenclature code shall be required to be mentioned by all registered taxpayers; and
(iii) the class of registered persons that would not be required to mention the Harmonised System of Nomenclature
code for goods or services:
Provided further that where an invoice is required to be issued under clause (f) of sub-section (3) of section
31(Self-invoicing), a registered person may issue a consolidated invoice at the end of a month for supplies
covered under sub-section (4) of section 9, the aggregate value of such supplies exceeds rupees five thousand in a
day from any or all the suppliers:
Provided also that in the case of the export of goods or services, the invoice shall carry an endorsement “SUPPLY
MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS
ON PAYMENT OF INTEGRATED TAX” or “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR
SEZ DEVELOPER FOR AUTHORISED OPERATIONS UNDER BOND OR LETTER OF UNDERTAKING
WITHOUT PAYMENT OF INTEGRATED TAX”, as the case may be, and shall, in lieu of the details specified in
clause (e), contain the following details, namely,- (i) name and address of the recipient; (ii) address of delivery; and
(iii) name of the country of destination:
Provided also that a registered person, other than the supplier engaged in making supply of services by way of
admission to exhibition of cinematograph films in multiplex screens, may not issue a tax invoice in accordance
with the provisions of clause (b) of sub-section (3) of section 31 subject to the following conditions, namely,-
(a) the recipient is not a registered person; and
(b) the recipient does not require such invoice(recipient is a composition dealer), and
shallissue a consolidated tax invoice for such supplies at the close of each day in respect of all such supplies.
Provided also that the signature or digital signature of the supplier or his authorised representative shall not be
required in the case of issuance of an electronic invoice in accordance with the provisions of the Information
Technology Act, 2000 (21 of 2000).
Provided also that the Governmentmay, by notification, on the recommendations of the Council, and subject to
such conditions and restrictions as mentioned therein, specify that the tax invoiceshall have Quick Response (QR)
code.
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Rule 46A - Invoice-cum-bill of supply
Notwithstanding anything contained in rule 46 or rule 49 or rule 54, where a registered person is supplying taxable
as well as exempted goods or services or both to an unregistered person, a single “invoice-cum-bill of supply” may
be issued for all such supplies.
Rule 47 - Time limit for issuing tax invoice
The invoice referred to in rule 46, in the case of the taxable supply of services, shall be issued within a period of
thirty days from the date of the supply of service:
Provided that where the supplier of services is an insurer or a banking company or a financial institution, including
a non-banking financial company, the period within which the invoice or any document in lieu thereof is to be
issued shall be forty five days from the date of the supply of service:
Provided further that an insurer or a banking company or a financial institution, including a non-banking financial
company, or a telecom operator, or any other class of supplier of services as may be notified by the Government on
the recommendations of the Council, making taxable supplies of services between distinct persons as specified in
section 25, may issue the invoice before or at the time such supplier records the same in his books of account or
before the expiry of the quarter during which the supply was made.
Rule 48 - Manner of issuing invoice
(1)The invoice shall be prepared in triplicate, in the case of supply of goods, in the following manner, namely,-
(a) the original copy being marked as ORIGINAL FOR RECIPIENT;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR SUPPLIER.
(2) The invoice shall be prepared in duplicate, in the case of the supply of services, in the following manner,
namely,-
(a) the original copy being marked as ORIGINAL FOR RECIPIENT; and
(b) the duplicate copy being marked as DUPLICATE FOR SUPPLIER.
(3) The serial number of invoices issued during a tax period shall be furnished electronically through the common
portal in FORM GSTR-1.
(4) The invoice shall be prepared by such class of registered persons as may be notified by the Government, on the
recommendations of the Council, by including such particulars contained in FORM GST INV-01after obtaining an
Invoice Reference Number by uploading information contained therein on the Common Goods and Services Tax
Electronic Portal in such manner and subject to such conditions and restrictions as may be specified in the
notification. (E-invoicing)
Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt a person or a
class of registered persons from issuance of invoice under this sub-rule for a specified period, subject to such
conditions and restrictions as may be specified in the said notification.
(5) Every invoice issued by a person to whom sub-rule (4) applies in any manner other than the manner specified in
the said sub-rule shall not be treated as an invoice(Mean’s if E-invoicing applicable but not issued, then the
invoice deemed to be invalid).
(6) The provisions of sub-rules (1) and (2) shall not apply to an invoice prepared in the manner specified in sub-rule
(4).
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Some important points on E-Invoicing
1. Limit of E-invoicing has been reduced to 20 crore via N/N 01/2022 dated 24/02/2022 from 50 crore
which is reduced via N/N 05/2021;
2. Previously, Limit of E-invoicing has been reduced to 50 crore via N/N 05/2021 dated 08/03/2021 from
100 crore which is reduced via N/N 88/2020 from 500 crore;
3. E-Invoicing is to be done for B2B transactions
4. The main activity to be perform for E-Invoicing is generation of IRN (invoice reference number) which is
to be mention in invoice to called it as E-Invoice.
5. Facility to auto-populate data of E-Invoicing in GSTR-1 is in order
6. E-Invoicing if generate wrong can be cancel within 24 hours of generation
7. Few exceptions are also there for non-generation of E-Invoicing in several cases :-
Banking co, insurance co, FI, NBFC,
Provider of GTA service
Provider of Passenger transport service
Administration of exhibition of cinematographic films
OIDAR services
8. E-Invoicing is only for persons whose turnover if beyond prescribed limits (i.e. only for persons having
turnover more than 20 crores)
9. E-Invoicing if applicable, then also to be made for export supplies.
10. E-Invoicing is too relevant to known about it for small taxpayers also whose are not covered under E-
Invoicing because on taking any inward supplies from a person liable for E-Invoicing, if the invoice
received by them doesn’t satisfy the conditions of E-Invoicing, then it is not treated as even Invoice as per
Rule 48(5), refer above. So, if such invoice doesn’t considered as invoice under eye of law then recipient is
ineligible to take ITC of such invoice as condition of section 16(2) doesn’t fulfilled.
Some important points on QR code (quick response code)
1. Now, Penalty is being waived off of non-compliance of QR code till 30th September 2021 via
Notification No. 28/2021-Central Tax, dated 30th June 2021which increase the time period specified in
Notification No. 89/2020-Central Tax, dated 29th November 2020 upto 31st March 2021 but subject to
condition that Penalty is being imposed if compliance of QR code has not been fulfilled after
01/04/2021.
Notification No. 14/2020-Central Tax, dated 21st March 2020 had been issued which requires
Dynamic QR Code on B2C invoice issued by taxpayers having aggregate turnover more than 500
crore rupees, w.e.f. 01.12.2020. Further, vide Notification No. 89/2020-Central Tax, dated 29th
November 2020, penalty has been waived for non-compliance of the provisions of Notification
No.14/2020 – Central Tax for the period from 01st December, 2020 to 31st March, 2021, subject to the
condition that the said person complies with the provisions of the said Notification from 01st April,
2021.
2. To which invoice is Notification No 14/2020-Central Tax dated 21st March, 2020 applicable?
This notification is applicable to a tax invoice issued to an unregistered person by a registered person
(B2C invoice) whose annual aggregate turnover exceeds 500 Cr rupees in any of the financial years
from 2017-18 onwards. However, the said notification is not applicable to an invoice issued in
following cases:
i. Where the supplier of taxable service is:
a) an insurer or a banking company or a financial institution, including a non-banking financial
company;
b) a goods transport agency supplying services in relation to transportation of goods by road in a
goods carriage;
c) supplying passenger transportation service;
d) supplying services by way of admission to exhibition of cinematograph in films in multiplex
screens
ii. OIDAR supplies made by any registered person, who has obtained registration under section 14 of
the IGST Act 2017, to an unregistered person.
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3. Would this requirement be applicable on invoices issued for supplies made for Exports?
As regards the supplies made for exports, though such supplies are made by a registered person to an
unregistered person, however, as e-invoices are required to be issued in respect of supplies for exports, in
terms of Notification no. 13/2020-Central Tax, dated 21st March, 2020 treating them as Business to
Business (B2B) supplies, Notification no. 14/2020-Central Tax, dated 21st March, 2020 will not be
applicable to them.
4. What parameters/ details are required to be captured in the Quick Response (QR) Code?
Dynamic QR Code, in terms of Notification No. 14/2020-Central Tax, dated 21st March, 2020 is
required, inter-alia, to contain the following information: –
i. Supplier GSTIN number
ii. Supplier UPI ID
iii. Payee’s Bank A/C number and IFSC
iv. Invoice number & invoice date,
v. Total Invoice Value and
vi. GST amount along with breakup i.e. CGST, SGST, IGST, CESS, etc.
Further, Dynamic QR Code should be such that it can be scanned to make a digital payment.
5. If a supplier provides/displays Dynamic QR Code, but the customer opts to make payment without
using Dynamic QR Code, then will the cross reference of such payment, made without use of Dynamic
QR Code, on the invoice, be considered as compliance of Dynamic QR Code on the invoice?
If the supplier has issued invoice having Dynamic QR Code for payment, the said invoice shall be
deemed to have complied with Dynamic QR Code requirements.
In cases where the supplier, has digitally displayed the Dynamic QR Code and the customer pays for
the invoice: –
i. Using any mode like UPI, credit/ debit card or online banking or cash or combination of various
modes of payment, with or without using Dynamic QR Code, and the supplier provides a cross
reference of the payment (transaction id along with date, time and amount of payment, mode of
payment like UPI, Credit card, Debit card, online banking etc.) on the invoice ; or
ii. In cash, without using Dynamic QR Code and the supplier provides a cross reference of the amount
paid in cash , along with date of such payment on the invoice;
The said invoice shall be deemed to have complied with the requirement of having Dynamic QR Code.
6. Once the E-commerce operator (ECO) or the online application has complied with the Dynamic QR Code
requirements, will the suppliers using such e-commerce portal or application for supplies still be
required to comply with the requirement of Dynamic QR Code?
The provisions of the notification shall apply to each supplier/registered person separately, if such
Person is liable to issue invoices with Dynamic QR Code for B2C supplies as per the said notification.
In case, the supplier is making supply through the E-commerce portal or application, and the said
supplier gives cross references of the payment received in respect of the said supply on the invoice, then
such invoices would be deemed to have complied with the requirements of Dynamic QR Code. In cases
other than pre-paid supply i.e. where payment is made after generation / issuance of invoice, the
supplier shall provide Dynamic QR Code on the invoice.
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CHAPTER VIII of CGST Act 2017 - ACCOUNTS AND RECORDS
Section 35 - Accounts and other records
(1) Every registered person shall keep and maintain, at his principal place of business, as mentioned in the
certificate of registration, a true and correct account of—
(a) production or manufacture of goods;

(b) inward and outward supply of goods or services or both;
(c) stock of goods;
(d) input tax credit availed;
(e) output tax payable and paid; and
(f) suchother particulars as may be prescribed:
Provided that where more than one place of business is specified in the certificate of registration, the accounts
relating to each place of business shall be kept at such places of business:
Provided further that the registered person may keep and maintain such accounts and other particulars in
electronic form in such manner as may be prescribed.
(2) Every owner or operator of warehouse or godown or any other place used for storage of goods and every
transporter, irrespective of whether he is a registered person or not, shall maintain records of the consigner,
consignee and other relevant details of the goods in such manner as may be prescribed.
(3) The Commissioner may notify a class of taxable persons to maintain additional accounts or documents for
such purpose as may be specified therein.
(4) Where the Commissioner considers that any class of taxable person is not in a position to keep and maintain
accounts in accordance with the provisions of this section, he may, for reasons to be recorded in writing, permit
such class of taxable persons to maintain accounts in such manner as may be prescribed.
(6) Subject to the provisions of clause (h) of sub-section (5) of section 17(goods lost, stolen, destroyed, written
off or disposed of by way of gift or free samples), where the registered person fails to account for the goods or
services or both in accordance with the provisions of sub-section (1), the proper officer shall determine the
amount of tax payable on the goods or services or both that are not accounted for, as if such goods or services or
both had been supplied by such person and the provisions of section 73 or section 74, as the case may be, shall,
mutatis mutandis, apply for determination of such tax.
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Section 36 - Period of retention of accounts
Every registered person required to keep and maintain books of account or other records in accordance with the
provisions of sub-section (1) of section 35 shall retain them until the expiry of seventy-two months from the due
date of furnishing of annual return for the year pertaining to such accounts and records:
Provided that a registered person, who is a party to an appeal or revision or any other proceedings before any
Appellate Authority or Revisional Authority or Appellate Tribunal or court, whether filed by him or by the
Commissioner, or is under investigation for an offence under Chapter XIX, shall retain the books of account and
other records pertaining to the subject matter of such appeal or revision or proceedings or investigation for a
period of one year after final disposal of such appeal or revision or proceedings or investigation, or for the period
specified above(72 months from due date of annual return), whichever is later.
For example – for FY 2017-18 upto which date records to be kept?

A) If no proceeding is pending;
B) If proceeding is dispose of on 31/01/2028
a) In such case record to be kept up to 31/12/2024 (31/12/2018 + 72 months)

b) In such case record to be kept up to
31/01/2028 + 1 year = 31/01/2029 whichever is later i.e. 31/02/2018
31/12/2018 + 72 months = 31/12/2024
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CHAPTER IX of CGST Act 2017 - RETURNS
Section 37 - Furnishing details of outward supplies
(1) Every registered person, other than an Input Service Distributor, a non-resident taxable person and a person
paying tax under the provisions of section 10 or section 51 or section 52, shall furnish, electronically, in such form
and manner as may be prescribed, the details of outward supplies of goods or services or both effected during a tax
period on or before the tenth day of the month succeeding the said tax period and such details shall be
communicated to the recipient of the said supplies within such time and in such manner as may be prescribed:
Provided that the registered person shall not be allowed to furnish the details of outward supplies during the period
from the eleventh day to the fifteenth day of the month succeeding the tax period:
Provided further that the Commissioner may, for reasons to be recorded in writing, by notification, extend the time
limit for furnishing such details for such class of taxable persons as may be specified therein:
Provided also that any extension of time limit notified by the Commissioner of State tax or Commissioner of Union
territory tax shall be deemed to be notified by the Commissioner.
(2) Every registered person who has been communicated the details under sub-section (3) of section 38 or the
details pertaining to inward supplies of Input Service Distributor under sub-section (4) of section 38, shall either
accept or reject the details so communicated, on or before the seventeenth day, but not before the fifteenth day, of
the month succeeding the tax period and the details furnished by him under sub-section (1) shall stand amended
accordingly. (As return u/s 38, GSTR-2 is not in use, so this is not relevant now)
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(3) Any registered person, who has furnished the details under sub-section (1)(in GSTR-1) for any tax period and
which have remained unmatched under section 42 or section 43, shall, upon discovery of any error or omission
therein, rectify such error or omission in such manner as may be prescribed, and shall pay the tax and interest, if
any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for
such tax period: (bill actual of 10000 + GST, wrongly entered as 1000 + GST, balance 9000 + GST invoice
can be amended in subsequently returns and pay the balance tax with interest in GSTR-3B)
Provided that no rectification of error or omission in respect of the details furnished under sub-section (1) shall be
allowed after furnishing of the return under section 39 for the month of September following the end of the
financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier.
Provided further that the rectification of error or omission in respect of the details furnished under sub-section (1)
shall be allowed after furnishing of the return under section 39 for the month of September, 2018 till the due date
for furnishing the details under subsection (1) for the month of March, 2019 or for the quarter January, 2019 to
March, 2019. (Sep’18 due dates extended till march’19 for this provision).
Explanation.––For the purposes of this Chapter, the expression “details of outward supplies” shall include details
of invoices, debit notes, credit notes and revised invoices issued in relation to outward supplies made during any
tax period.
Section 38 - Furnishing details of inward supplies (In Relation to GSTR-2, not in-force now)
(1) Everyregistered person, other than an Input Service Distributor or a non-resident taxable person or a person
paying tax under the provisions of section 10 or section 51 or section 52, shall verify, validate, modify or delete, if
required, the details relating to outward supplies and credit or debit notes communicated under sub-section (1) of
section 37 to prepare the details of his inward supplies and credit or debit notes and may include therein, the details
of inward supplies and credit or debit notes received by him in respect of such supplies that have not been declared
by the supplier under sub-section (1) of section 37.
(2) Everyregistered person, other than an Input Service Distributor or a non-resident taxable person or a person
paying tax under the provisions of section 10 or section 51 or section 52, shall furnish, electronically, the details of
inward supplies of taxable goods or services or both, including inward supplies of goods or services or both on
which the tax is payable on reverse charge basis under this Act and inward supplies of goods or services or both
taxable under the Integrated Goods and Services Tax Act or on which integrated goods and services tax is payable
under section 3 of the Customs Tariff Act, 1975, and credit or debit notes received in respect of such supplies
during a tax period after the tenth day but on or before the fifteenth day of the month succeeding the tax period in
such form and manner as may be prescribed:
Provided that the Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit
for furnishing such details for such class of taxable persons as may be specified therein:
Provided further that any extension of time limit notified by the Commissioner of State tax or Commissioner of
Union territory tax shall be deemed to be notified by the Commissioner.
(3) The details of supplies modified, deleted or included by the recipient and furnished under sub-section (2) shall
be communicated to the supplier concerned in such manner and within such time as may be prescribed.
(4) The details of supplies modified, deleted or included by the recipient in the return furnished under sub-section
(2) or sub-section (4) of section 39 shall be communicated to the supplier concerned in such manner and within
such time as may be prescribed.
(5) Anyregistered person, who has furnished the details under sub-section (2) for any tax period and which have
remained unmatched under section 42 or section 43, shall, upon discovery of any error or omission therein, rectify
such error or omission in the tax period during which such error or omission is noticed in such manner as may be
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prescribed, and shallpay the tax and interest, if any, in case there is a short payment of tax on account of such error
or omission, in the return to be furnished for such tax period:
Provided thatno rectification of error or omission in respect of the details furnished under sub-section (2) shall be
allowed after furnishing of the return under section 39 for the month of September following the end of the
financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier.
Section 39 - Furnishing of returns
(1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person
paying tax under the provisions of section 10 or section 51 or section 52shall, for every calendar month or part
thereof, furnish, in such form and manner as may be prescribed, a return (GSTR-3 called as GSTR-3B now),
electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable,
tax paid and such other particulars, in such form and manner, and within such time, as may be prescribed, on or
before the twentieth day of the month succeeding such calendar month or part thereof.
(2) A registered person paying tax under the provisions of section 10shall, for each quarter or part thereof, furnish,
in such form and manner as may be prescribed, a return (GSTR-4), electronically, of turnover in the State or
Union territory, inward supplies of goods or services or both, tax payable and tax paid within eighteen days after
the end of such quarter.
(3) Every registered person required to deduct tax at source under the provisions of section 51 shall furnish, in such
form and manner as may be prescribed, a return (GSTR-7), electronically, for the month in which such deductions
have been made within ten days after the end of such month.
(4) Everytaxable person registered as an Input Service Distributor shall, for every calendar month or part thereof,
furnish, in such form and manner as may be prescribed, a return (GSTR-6), electronically, within thirteen days
after the end of such month.
(5) Every registered non-resident taxable person shall, for every calendar month or part thereof, furnish, in such
form and manner as may be prescribed, a return(GSTR-5), electronically, within twenty days after the end of a
calendar month or within seven days after the last day of the period of registration specified under sub-section (1)
of section 27, whichever is earlier.
(6) The Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit for
furnishing the returns under this section for such class of registered persons as may be specified therein: Provided
that any extension of time limit notified by the Commissioner of State tax or Union territory tax shall be deemed to
be notified by the Commissioner.
(7) Every registered person, who is required to furnish a return under sub-section (1) or sub-section (2) or sub-
section (3) or sub-section (5), shall pay to the Government the tax due as per such return not later than the last date
on which he is required to furnish such return.
(8) Every registered person who is required to furnish a return under sub-section (1) or sub-section (2) shall furnish
a return for every tax period whether or not any supplies of goods or services or both have been made during such
tax period.
(9) Subject to the provisions of sections 37 and 38, if any registered person after furnishing a return under sub-
section (1) or sub-section (2) or sub-section (3) or sub-section (4) or sub-section (5) discovers any omission or
incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax
authorities, he shallrectify such omission or incorrect particulars in the return to be furnished for the month or
quarter during which such omission or incorrect particulars are noticed, subject to payment of interest under this
Act:
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Provided thatno such rectification of any omission or incorrect particulars shall be allowed after the due date for
furnishing of return for the month of September or second quarter following the end of the financial year, or the
actual date of furnishing of relevant annual return, whichever is earlier.
(10) A registered person shall not be allowed to furnish a return for a tax period if the return for any of the previous
tax periods has not been furnished by him. (Old month or quarter GST return must be file, for filling next
month return)
Section 40 - First return
Every registered person who has made outward supplies in the period between the date on which he became liable
to registration till the date on which registration has been granted shall declare the same in the first return furnished
by him after grant of registration.
(For Example – liable to registration on 09/01/2019, and registration granted on 14/02/2019, so the first
return can be filled for the period 09/01/2019 to 28/02/2019 i.e. for 1 month and 20 days of Jan 2019)
Section 41 - Claim of input tax credit and provisional acceptance thereof
(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed, be entitled to
take the credit of eligible input tax, as self-assessed, in his return and such amount shall be credited on a provisional
basis to his electronic credit ledger. (Provisional ITC is allowed under this section as section 16(2)(d)restricted
that recipient can take ITC only when supplier has filled his return, so that’s why need of this section arises to
allow recipient to allow ITC on provisional basis)
(2) The credit referred to in sub-section (1) shall be utilised only for payment of self- assessed output tax as per the
return referred to in the said sub-section.
Section 42 - Matching, reversal and reclaim of input tax credit
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(1) The details of every inward supply furnished by a registered person (hereafter in this section referred to as the
“recipient”) for a tax period shall, in such manner and within such time as may be prescribed, be matched -
(a) with the corresponding details of outward supply furnished by the corresponding registered person (hereafter in
this section referred to as the “supplier”) in his valid return for the same tax period or any preceding tax period;
(b) with the integrated goods and services tax paid under section 3 of the Customs Tariff Act, 1975 in respect of
goods imported by him; and
(c) for duplication of claims of input tax credit.
(2) The claim of input tax credit in respect of invoices or debit notes relating to inward supply that match with the
details of corresponding outward supply or with the integrated goods and services tax paid under section 3 of the
Customs Tariff Act, 1975 in respect of goods imported by him shall be finally accepted and such acceptance shall
be communicated(in GSTR-2, not in use now), in such manner as may be prescribed, to the recipient.
(3) Where the input tax credit claimed by a recipient in respect of an inward supply is in excess of the tax declared
by the supplier for the same supply or the outward supply is not declared by the supplier in his valid returns, the
discrepancy shall be communicated to both such persons in such manner as may be prescribed.
(4) The duplication of claims of input tax credit shall be communicated to the recipient in such manner as may be
prescribed.
(5) The amount in respect of which any discrepancy is communicated under sub-section (3) and which is not
rectified by the supplier in his valid return for the month in which discrepancy is communicated shall be added to
the output tax liability of the recipient, in such manner as may be prescribed, in his return for the month succeeding
the month in which the discrepancy is communicated.
(6) The amount claimed as input tax credit that is found to be in excess on account of duplication of claims shall be
added to the output tax liability of the recipient in his return for the month in which the duplication is
communicated.
(7) The recipient shall be eligible to reduce, from his output tax liability, the amount added under sub-section (5), if
the supplier declares the details of the invoice or debit note in his valid return within the time specified in sub-
section (9) of section 39.
(8) A recipient in whose output tax liability any amount has been added under sub-section (5) or sub-section (6),
shall be liable to pay interest at the rate specified under sub-section (1) of section 50 on the amount so added from
the date of availing of credit till the corresponding additions are made under the said sub-sections.
(9) Where any reduction in output tax liability is accepted under sub-section (7), the interest paid under sub-section
(8) shall be refunded to the recipient by crediting the amount in the corresponding head of his electronic cash
ledger in such manner as may be prescribed:
Provided that the amount of interest to be credited in any case shall not exceed the amount of interest paid by the
supplier.
(10) The amount reduced from the output tax liability in contravention of the provisions of sub-section (7) shall be
added to the output tax liability of the recipient in his return for the month in which such contravention takes place
and such recipient shall be liable to pay interest on the amount so added at the rate specified in sub-section (3) of
section 50.
Section 43 - Matching, reversal and reclaim of reduction in output tax liability(just reverse of section 42
above)
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(1) The details of every credit note relating to outward supply furnished by a registered person (hereafter in this
section referred to as the “supplier”) for a tax period shall, in such manner and within such time as may be
prescribed, be matched––
(a) with the corresponding reduction in the claim for input tax credit by the corresponding registered person
(hereafter in this section referred to as the “recipient”) in his valid return for the same tax period or any subsequent
tax period; and
(b) for duplication of claims for reduction in output tax liability.
(2) The claim for reduction in output tax liability by the supplier that matches with the corresponding reduction in
the claim for input tax credit by the recipient shall be finally accepted and communicated, in such manner as may
be prescribed, to the supplier.
(3) Where the reduction of output tax liability in respect of outward supplies exceeds the corresponding reduction
in the claim for input tax credit or the corresponding credit note is not declared by the recipient in his valid returns,
the discrepancy shall be communicated to both such persons in such manner as may be prescribed.
(4) The duplication of claims for reduction in output tax liability shall be communicated to the supplier in such
manner as may be prescribed.
rectified by the recipient in his valid return for the month in which discrepancy is communicated shall be added to
the output tax liability of the supplier, in such manner as may be prescribed, in his return for the month succeeding
the month in which the discrepancy is communicated.
(6) The amount in respect of any reduction in output tax liability that is found to be on account of duplication of
claims shall be added to the output tax liability of the supplier in his return for the month in which such duplication
is communicated.
(7) The supplier shall be eligible to reduce, from his output tax liability, the amount added under sub-section (5) if
the recipient declares the details of the credit note in his valid return within the time specified in sub-section (9) of
section 39.
(8) A supplier in whose output tax liability any amount has been added under sub-section (5) or sub-section (6),
shall be liable to pay interest at the rate specified under sub-section (1) of section 50 in respect of the amount so
added from the date of such claim for reduction in the output tax liability till the corresponding additions are made
under the said sub-sections.
(9) Where any reduction in output tax liability is accepted under sub-section (7), the interest paid under sub-section
(8) shall be refunded to the supplier by crediting the amount in the corresponding head of his electronic cash ledger
in such manner as may be prescribed:
Provided that the amount of interest to be credited in any case shall not exceed the amount of interest paid by the
recipient.
(10) The amount reduced from output tax liability in contravention of the provisions of sub-section (7) shall be
added to the output tax liability of the supplier in his return for the month in which such contravention takes place
and such supplier shall be liable to pay interest on the amount so added at the rate specified in sub-section (3) of
section 50.
Section 44 - Annual return
(1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section
52, a casual taxable person and a non-resident taxable person shall furnish an annual return which may include a
self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the
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financial year, with the audited annual financial statement for every financial year electronically, within such time
and in such form and in such manner as may be prescribed:
Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt any class of
registered persons from filing annual return under this section:
Provided further that nothing contained in this section shall apply to any department of the Central Government or
a State Government or a local authority, whose books of account are subject to audit by the Comptroller and
Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the
time being in force.
(Now, this GSTR-9A is GSTR-4)
Sections 45 - Final return (GSTR-10)
Every registered person who is required to furnish a return under sub-section (1) of section 39 and whose
registration has been cancelled shall furnish a final return within three months of the date of cancellation or date of
order of cancellation, whichever is later, in such form and manner as may be prescribed.
Section 46 - Notice to return defaulters (GSTR-3A)
Where a registered person fails to furnish a return under section 39 or section 44 or section 45, a notice shall be
issued requiring him to furnish such return within fifteen days in such form and manner as may be prescribed.
(Afterwards, best judgment assessment can be done by PO)
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Section 47 - Levy of late fee
(1) Any registered person who fails to furnish the details of outward or inward supplies required under section 37
or section 38 or returns required under section 39 or section 45 by the due date shall pay a late fee of one hundred
rupees for every day during which such failure continues subject to a maximum amount of five thousand rupees.
Reduced via notifications to 25 per day (in case of tax liability) and 10 per day (in case of no tax liability),
maximum capping is same.
Mean’s Late Fees for GSTR-1, 2, 3B, 10 = 25/10 per day; or whichever is higher
5000
(2) Any registered person who fails to furnish the return required under section 44 (Annual Return – GSTR-9) by
the due date shall be liable to pay a late fee of one hundred rupees for every day during which such failure
continues subject to a maximum of an amount calculated at a quarter percent of his turnover in the State or Union
territory.
Mean’s Late Fees for GSTR-9 and 9C = 100 per day; or whichever is higher
0.25 % X Turnover
Section 48 - Goods and services tax practitioners
(1) The manner of approval of goods and services tax practitioners, their eligibility conditions, duties and
obligations, manner of removal and other conditions relevant for their functioning shall be such as may be
prescribed.
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(2) A registered person may authorise an approved goods and services tax practitioner to furnish the details of
outward supplies under section 37, the details of inward supplies under section 38 and the return under section 39
or section 44 or section 45 and to perform such other functions in such manner as may be prescribed.
(3) Notwithstanding anything contained in sub-section (2), the responsibility for correctness of any particulars
furnished in the return or other details filed by the goods and services tax practitioners shall continue to rest with
the registered person on whose behalf such return and details are furnished. (Mean’s Registered Person (who has
appointed practitioner) is totally liable for correctness of the particulars)
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CHAPTER X of CGST Act 2017 - PAYMENT OF TAX
Section 49 - Payment of tax, interest, penalty and other amounts
(1) Every deposit made towards tax, interest, penalty, fee or any other amount(cess) by a person by internet
banking or by using credit or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement or by
such other mode and subject to such conditions and restrictions as may be prescribed, shall be credited to the
electronic cash ledger of such person to be maintained in such manner as may be prescribed.
(2) The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit
ledger, in accordance with section 41(Provisional Credit), to be maintained in such manner as may be prescribed.
(3) The amount available in the electronic cash ledger may be used for making any payment towards tax, interest,
penalty, fees or any other amount payable under the provisions of this Act or the rules made thereunder in such
manner and subject to such conditions and within such time as may be prescribed.
(4) The amount available in the electronic credit ledger may be used for making any payment towards output tax
under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions
and within such time as may be prescribed.
(5) The amount of input tax credit available in the electronic credit ledger of the registered person on account of––
(a) integrated tax shall first be utilised towards payment of integrated tax(No. 1) and the amount remaining, if any,
may be utilised towards the payment of central tax(No. 2) and State tax(No. 3), or as the case may be, Union
territory tax, in that order;
(b) the central tax shall first be utilised towards payment of central tax(No. 1) and the amount remaining, if any,
may be utilised towards the payment of integrated tax(No. 2);
(c) the State tax shall first be utilised towards payment of State tax(No. 1) and the amount remaining, if any, may
be utilised towards payment of integrated tax(No. 2)
Provided that the input tax credit on account of State tax shall be utilised towards payment of integrated tax only
where the balance of the input tax credit on account of central tax is not available for payment of integrated
tax;(Mean’s utilisation of SGST ITC towards IGST Liability can only be done after whole set-off of CGST ITC,
we can’t adjust less by CGST ITC and remaining by SGST ITC)
(d) the Union territory tax shall first be utilised towards payment of Union territory tax(No. 1) and the amount
remaining, if any, may be utilised towards payment of integrated tax(No. 2):
Provided that the input tax credit on account of Union territory tax shall be utilised towards payment of integrated
tax only where the balance of the input tax credit on account of central tax is not available for payment of
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integrated tax;(Mean’s utilisation of UTGST ITC towards IGST Liability can only be done after whole set-off of
CGST ITC, we can’t adjust less by CGST ITC and remaining by UTGST ITC)
(e) the central tax shall not be utilised towards payment of State tax or Union territory tax(Janni dushman); and
(f) the State tax or Union territory tax shall not be utilised towards payment of central tax(Janni dushman).
(6) The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or
any other amount payable under this Act or the rules made there under may be refunded in accordance with the
provisions of section 54(we deals with refund procedure in next chapter).
(7) All liabilities of a taxable person under this Act shall be recorded and maintained in an electronic liability
register in such manner as may be prescribed.
(8) Every taxable person shall discharge his tax and other dues under this Act or the rules made there under in the
following order, namely:––
(a) self-assessed tax, and other dues related to returns of previous tax periods;
(b) self-assessed tax, and other dues related to the return of the current tax period;
(c) any other amount payable under this Act or the rules made there under including the demand determined under
section 73 or section 74.
(9) Every person who has paid the tax on goods or services or both under this Act shall, unless the contrary is
proved by him, be deemed to have passed on the full incidence of such taxto the recipient of such goods or services
or both.
Explanation.––For the purposes of this section,—
(a) the date of credit to the account of the Government in the authorised bank shall be deemed to be the date of
deposit in the electronic cash ledger;
(b) the expression,—
(i) “tax dues” means the tax payable under this Act and does not include interest, fee and penalty; and
(ii) “other dues” means interest, penalty, fee or any other amount payable(cess) under this Act or the rules made
there under.
(10) A registered person may, on the common portal, transfer any amount of tax, interest, penalty, fee or any other
amount available in the electronic cash ledger under this Act, to the electronic cash ledger for integrated tax, central
tax, State tax, Union territory tax or cess, in such form and manner and subject to such conditions and restrictions
as may be prescribed and such transfer shall be deemed to be a refund from the electronic cash ledger under this
Act(This inter head or intra head transfer within E-cash ledger can be done via form GST PMT-09 available in
E-cash Ledger).
(11) Where any amount has been transferred to the electronic cash ledger under this Act, the same shall be deemed
to be deposited in the said ledger as provided in sub-section (1).
Section 49A – Uti lisation of input tax credit subject to certain conditions
(1) Notwithstanding anything contained in section 49, the input tax credit on account of central tax, State tax or
Union territory tax shall be utilised towards payment of integrated tax, central tax, State tax or Union territory tax,
as the case may be, only after the input tax credit availableon account of integrated tax has first been utilised fully
towards such payment(Firstly, IGST ITC will be utilised wholly towards IGST liability, if then also balance
IGST ITC remains then it will be utilised further towards CGST and SGST liability in order).
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Section 49B - Order of utilisation of input tax credit
(1) Notwithstanding anything contained in this Chapter and subject to the provisions of clause (e) and clause (f) of
sub-section (5) of section 49, the Government may, on the recommendations of the Council, prescribe the order and
manner of utilisation of the input tax credit on account of integrated tax, central tax, State tax or Union territory tax,
as the case may be, towards payment of any such tax.
Section 50 - Interest on delayed payment of tax
(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made there
under, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the
period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding
eighteen per cent., as may be notified by the Government on the recommendations of the Council:
Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return
for the said period furnished after the due date in accordance with the provisions of section 39, except where such
return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said
period, shall believed on that portion of the tax that is paid by debiting the electronic cash ledger(after so many
case laws, it has been finalised and notified that Interest shall be charged on NET tax liability only).
(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day
succeeding the day on which such tax was due to be paid(Interest is charged from the day tax is payable till the
tax is paid).
(3) A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42
or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such
undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-
four per cent., as may be notified by the Government on the recommendations of the Council(on excess ITC
claimed or short output liability declared, interest can be charged maximum @ 24%).
Section 51 - Tax deduction at source
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(1) Notwithstanding anything to the contrary contained in this Act, the Government may mandate(Mean’s it
became mandatory from the date notified by govt – which is 01/10/2018 via N/N 50/2018-CT dated
13/09/2018),––
(a) a department or establishment of the Central Government or State Government; or

(b) local authority; or
(c) Governmental agencies; or
(d) such persons or category of persons as may be notified by the Government on the recommendations of the
Council, (hereafter in this section referred to as “the deductor”), to deduct tax at the rate of one percent from the
payment made or credited to the supplier (hereafter in this section referred to as “the deductee”) of taxable goods or
services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees:
Mean’s condition are:-

1. Deductor should be govt entity;
2. There must be a contact;
3. Value of contract > 2,50,000/-
Provided that no deduction(No TDS) shall be made if the location of the supplier and the place of supply is in a
State or Union territory which is different from the State or as the case may be, Union territory of registration of the
recipient. (This provision is applicable only on intra-state transactions only, not applicable in inter-state
supply)
Explanation.––For the purpose of deduction of tax specified above, the value of supply shall be taken as the
amount excluding the central tax, State tax, Union territory tax, integrated tax and cess indicated in the invoice.
(Value should be value as per section 15 of CGST Act 2017)
(2) The amount deducted as tax under this section shall be paid to the Government by the deductor within ten days
after the end of the month in which such deduction is made, in such manner as may be prescribed. (Due date of
GSTR-7 is 10th of the next month)
(3) A certificate of tax deduction at source shall be issued in such form and in such manner as may be prescribed.
Late fees levy on late issue of TDS certificate = 100 Per day; whichever is lower
5,000/-
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(5) The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of
the deductor furnished under sub-section (3) of section 39, in such manner as may be prescribed (Same as of Form
26AS, deductee can claim benefit of such deduction, here, deductee (called as supplier), can transfer such
credit to his E-cash Ledger).
(6) If any deductor fails to pay to the Government the amount deducted as tax under sub-section (1), he shallpay
interest in accordance with the provisions of sub-section (1) of section 50, in addition to the amount of tax
deducted.
(7) The determination of the amount in default under this section shall be made in the manner specified in section
73 or section 74. (These sections 73 and 74, we cover later on in chapter XV – Demand and recoveries)
(8) The refund to the deductor or the deductee arising on account of excess or erroneous deduction shall be dealt
with in accordance with the provisions of section 54(This section 54, we cover in detail in just next chapter XI –
Refunds):
Provided thatno refund to the deductor shall be granted, if the amount deducted has been credited to the electronic
cash ledger of the deductee.
Section 52 - Collection of tax at source
(1) Notwithstanding anything to the contrary contained in this Act, everyelectronic commerce operator (hereafter in
this section referred to as the “operator”), not being an agent, shall collect an amount calculated at such rate not
exceeding one percent, as may be notified by the Government on the recommendations of the Council, of the net
value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is
to be collected by the operator(It became mandatory from the date notified by govt– which is 01/10/2018 via
N/N 51/2018-CT dated 13/09/2018)
Mean’s condition are:-

1. TCS collected by ECO
2. He shall amount @ 1% CGST and same also written in SGST Act 2017, so 1% +1%
3. Last line is too important where; consideration is collected by ECO mean’s Like Amazon, Flipkart
payment collected wholly by them first from the customer.
.
Explanation.––For the purposes of this sub-section, the expression “net value of taxable supplies” shall mean the
aggregate value of taxable supplies of goods or services or both, other than services notified under sub-section (5)
of section 9(Mean’s services like OLA, UBER not covered under such value for TCS), made during any month by
all registered persons through the operator reduced by the aggregate value of taxable supplies returned to the
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suppliers(Supplies returned from the customers will be reduced while determining value for TCS) during the
said month.
(2) The power to collect the amount(TCS) specified in sub-section (1) shall be without prejudice to any other mode
of recovery from the operator (As whole consideration after deducting own commission by ECO has to be pay to
the supplier, so instead of collecting TCS from supplier, such amount will de deducted from the payment to be
made to the supplier).
For Example – if customer place order of table on Amazon for 500, then Amazon receive 500 from customer
then while making payment to supplier of table, Amazon deduct its commission suppose 10% then it means, he
need to pay to customer after deducting its commission (Rs. 50), but also he need to collect TCS from such
supplier @ 2%(1%CGST +1% SGST), so the value to be Pay by amazon to supplier 500-50-10 =440
Note- For easy understand, we have not taken the GST rate of product in calculations.
(3) The amount collected under sub-section (1) shall be paid to the Government by the operator within ten days
after the end of the month in which such collection is made, in such manner as may be prescribed. (Due date of
GSTR-8 is 10th of the next month)
(4) Every operator who collects the amount specified in sub-section (1) shall furnish a statement (GSTR-8),
electronically, containing the details of outward supplies of goods or services or both effected through it, including
the supplies of goods or services or both returned through it, and the amount collected under sub-section (1) during
a month, in such form and manner as may be prescribed, within ten days after the end of such month:
Explanation: - For the purposes of this sub-section, it is hereby declared that the due date for furnishing the said
statement for the months of October, November and December, 2018 shall be the 07th February, 2019.
Provided that the Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit
for furnishing the statement for such class of registered persons as may be specified therein:
Provided further that any extension of time limit notified by the Commissioner of State tax or the Commissioner of
Union territory tax shall be deemed to be notified by the Commissioner(Extension in SGST/UTGST Act deemed
as extension in CGST Act also).
(5) Every operator who collects the amount specified in sub-section (1) shall furnish an annual statement(GSTR-
9), electronically, containing the details of outward supplies of goods or services or both effected through it,
including the supplies of goods or services or both returned through it, and the amount collected under the said sub-
section during the financial year, in such form and manner as may be prescribed, before the thirty first day of
December following the end of such financial year.
Provided that the Commissioner may, on the recommendations of the Council and for reasons to be recorded in
writing, by notification, extend the time limit for furnishing the annual statement for such class of registered
persons as may be specified therein:
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Provided further that any extension of time limit notified by the Commissioner of State tax or the Commissioner of
Union territory tax shall be deemed to be notified by the Commissioner. (Extension in SGST/UTGST Act
deemed as extension in CGST Act also).
(6) If any operator after furnishing a statement under sub-section (4) discovers any omission or incorrect particulars
therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall
rectify such omission or incorrect particulars in the statement to be furnished for the month during which such
omission or incorrect particulars are noticed, subject to payment of interest, as specified in sub-section (1) of
section 50:
Provided thatno such rectification of any omission or incorrect particulars shall be allowed after the due date for
furnishing of statement for the month of September following the end of the financial year or the actual date of
furnishing of the relevant annual statement, whichever is earlier.
Amendment in GSTR-8 is allowed till = Due Date of Sep month return; or whichever is earlier
Actual date of filling of Annual Return
(7) The supplier who has supplied the goods or services or both through the operator shall claim credit, in his
electronic cash ledger, of the amount collected and reflected in the statement of the operator furnished under sub-
section (4), in such manner as may be prescribed. (Same as of Form 26AS, deductee can claim benefit of such
deduction, here, deductee (called as supplier), can transfer such credit of TCS collected by the ECO, to his E-
cash Ledger).
(8) The details of supplies furnished by every operator under sub-section (4) shall bematched with the
corresponding details of outward supplies furnished by the concerned supplier registered under this Act in such
manner and within such time as may be prescribed. (Supplies by supplier = Supplies by ECO)
(9) Where the details of outward supplies furnished by the operator under sub-section (4) do not match with the
corresponding details furnished by the supplier under section 37 or section 39, the discrepancy shall be
communicated to both persons in such manner and within such time as may be prescribed. (if Mismatch occur in
GSTR-1 of supplier vs GSTR-8 of ECO then, the discrepancy shall be communicated to both for corerections)
rectified by the supplier in his valid return or the operator in his statement for the month in which discrepancy is
communicated, shall be added to the output tax liability of the said supplier, where the value of outward supplies
furnished by the operator is more than the value of outward supplies furnished by the supplier, in his return for the
month succeeding the month in which the discrepancy is communicated in such manner as may be prescribed.
For Example – Value of supplies by ECO = 10 Lakhs

Value of supplies by ECO = 8 Lakhs
Then, the difference of 2 Lakhs on which GST not received by the supplier via GSTR-1 and 3B shall be added
to supplier’s liability
(11) The concerned supplier, in whose output tax liability any amount has been added under sub-section (10), shall
pay the tax payable in respect of such supply along with interest, at the rate specified under sub-section (1) of
section 50 on the amount so added from the date such tax was due till the date of its payment. (Such, GST on 2
Lakhs will be pay along with Interest on net tax liability)
(12) Any authority not below the rank of Deputy Commissioner may serve a notice, either before or during the
course of any proceedings under this Act, requiring the operator to furnish such details relating to—
(a) supplies of goods or services or both effected through such operator during any period; or
(b) stock of goods held by the suppliers making supplies through such operator in the godowns or warehouses, by
whatever name called, managed by such operator and declared as additional places of business by such suppliers,
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as may be specified in the notice. (Like- in many cases, supplier for fast dispatch of goods, warehouse his goods
in ECO godowns (Amazon) and pay rental of space accordingly, which is nominal)
(13) Every operator on whom a notice has been served under sub-section (12) shall furnish the required information
within fifteen working days of the date of service of such notice.
(14) Any person who fails to furnish the information required by the notice served under sub-section (12) shall,
without prejudice to any action that may be taken under section 122, be liable to a penalty which may extend to
twenty-five thousand rupees.(Penalty levied u/s 122 will be in addition to penalty under this section which
may extends to Rs. 25,000/-)
Explanation.—For the purposes of this section, the expression “concerned supplier” shall mean the supplier of
goods or services or both making supplies through the operator.
Section 53 - Transfer of input tax credit
On utilisation of input tax credit availed under this Act(which is CGST ITC)for payment of tax dues under the
Integrated Goods and Services Tax Act (which is IGST output tax liability) in accordance with the provisions of
sub-section (5) of section 49, as reflected in the valid return furnished under sub-section (1) of section 39, the
amount collected(Mean’s the tax amount of IGST liability which is adjusted with CGST ITC) as central tax
shall stand reduced by an amount equal to such credit so utilised and the Central Government shall transfer an
amount equal to the amount so reduced from the central tax account to the integrated tax account in such manner
and within such time as may be prescribed. (Mean’s such tax value of utilisation shall be transfer by CG, as due
to CGST ITC, collection under IGST head of govt, got reduced so CG will transfer such amount of tax, and the
same procedure will also be in IGST, SGST and UTGST Acts)
Section 53A - Transfer of certain amounts
Where any amount has been transferred from the electronic cash ledger under this Act to the electronic cash ledger
under the State Goods and Services Tax Act or the Union territory Goods and Services Tax Act, the Government
shall, transfer to the State tax account or the Union territory tax account, an amount equal to the amount transferred
from the electronic cash ledger, in such manner and within such time as may be prescribed.(CGST E-cash ledger
balance transfer to SGST/UTGST e-cash ledger the same adjustments to be done by Government also)
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CHAPTER XI of CGST Act 2017 - REFUNDS
Section 54 - Refund of tax
(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him,
may make an application before the expiry of two years from the relevant date in such form and manner as may be
prescribed:
As it might be possible that due to urgency, transporter may deposit Tax and penalty which is under
temporary ID, so he can go for appeals on its justifiable grounds, then he may also take refund under this sub-
section, so written as ANY PERSON, to extend the scope of person for refunds.
Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with
the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in
such manner as may be prescribed. (But practically, this proviso is not in force till date, as in GSTR-3B there is
no option to claim refund of the amount under E-cash Ledger)
(2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and
Organisation notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of
foreign countries or any other person or class of persons, as notified under section 55, entitled to a refund of tax
paid by it on inward supplies of goods or services or both, maymake an application for such refund, in such form
(RFD-10 + GSTR-11) and manner as may be prescribed(Rule 95), before the expiry of six monthsfrom the last
day of the quarter in which such supply was received. (Cover Section 55 and Rule 95 with this section, both
mentioned below)
(3) Subject to the provisions of sub-section (10), a registered personmay claim refund of any unutilised input tax
credit(Mean’s refund of E-credit Ledger) at the end of any tax period:
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Provided thatno refund of unutilised input tax credit shall be allowed in cases other than––
(i) zero rated supplies(Section 16 of IGST Act 2017)made without payment of tax;(Here refund of ITC allowed)
(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output
supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be
notified by the Government on the recommendations of the Council: (called as Inverted duty structure)
Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out
of India are subjected to export duty: (No ITC refund in case such export liable to export duty)
Provided also thatno refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of
drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.(No ITC refund in
case supplier has taken drawbacks or taken refund of IGST)
(4) The applicationshall be accompanied by—
(a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and
(b) such documentary or other evidence (including the documents referred to in section 33) as the applicant may
furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation
to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had
not been passed on to any other person:
Provided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for the
applicant to furnish any documentary and other evidences but he may file a declaration, based on the documentary
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or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on
to any other person.
(5) If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed
as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the
Fund(called as consumer welfare fund) referred to in section 57.
(6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for
refund on account of zero-rated supply of goods or services or both made by registered persons, other than such
category of registered persons as may be notified by the Government on the recommendations of the Council,
refund on a provisional basis, ninety percentof the total amount so claimed, excluding the amount of input tax
credit provisionally accepted, in such manner and subject to such conditions, limitations and safeguards as may be
prescribed and thereafter make an order under sub-section (5) for final settlement of the refund claim after due
verification of documents furnished by the applicant. (90% refund will give on provisional basis, rest 10% will be
given after due verification of documents)
(7) The proper officershall issue the order under sub-section (5) within sixty days from the date of receipt of
application complete in all respects. (Mean’s 2 months’ time given to PO for its verification of refund
proceedings)
(8) Notwithstanding anything contained in sub-section (5), the refundableamountshall, instead of being credited to
the Fund, be paid to the applicant, if such amount is relatable to—
(a) refund of tax paid(refund of IGST paid) on export of goods or services or both or on inputs or input services
used in making such exports;(Here refund of ITC allowed)
(b) refund of unutilised input tax credit under sub-section (3); (Zero-rated supplies and Inverted tax structure
refund)
(c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not
been issued, or where a refund voucher has been issued; (GST paid on advances for services, which not rendered
afterwards)
(d) refund of tax in pursuance of section 77; (CGST+SGST paid instead of IGST or vise-versa)
(e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of
such tax and interest to any other person; or (Refund of E-cash Ledger)
(f) the tax or interest borne by such other class of applicants as the Government may, on the recommendations of
the Council, by notification, specify. (Refund of E-cash Ledger)
(8A) The Governmentmaydisburse the refund of the State tax in such manner as may be prescribed. (Same kind of
procedure for SGST refund is also mentioned under SGST Act 2017)
(9) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate
Tribunal or any court or in any other provisions of this Act or the rules made thereunder or in any other law for the
time being in force, no refund shall be madeexcept in accordance with the provisions of sub-section (8).(Mean’s
judgement, decree, order of Tribunal or court order for refund can only be made for the above mentioned cases
in section 54(8) only, otherwise if not falls in the cases mentioned in the section 54(8), then no refund can be
granted at all).
(10) Where any refund is due under sub-section (3) to a registered person who has defaulted in furnishing any
returnorwho is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or
Appellate Authority by the specified date, the proper officermay—
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(a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty,
as the case may be;
(b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable
to pay but which remains unpaid under this Act or under the existing law.
Explanation.––For the purposes of this sub-section, the expression “specified date” shall mean the last date for
filing an appeal under this Act.
(11) Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any
other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is
likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud
committed, hemay, after giving the taxable person an opportunity of being heard, withhold the refund till such time
as he may determine.
(12) Where a refund is withheld under sub-section (11), the taxable personshall, notwithstanding anything
contained in section 56, be entitled to interest at such rate not exceeding six percent as may be notified on the
recommendations of the Council, if as a result of the appeal or further proceedings he becomes entitled to refund.
(withheld period of refund is entitled for interest on such refund, maximum 6%)
(13) Notwithstanding anything to the contrary contained in this section, the amount of advance tax deposited by a
casual taxable person or a non-resident taxable person under sub-section (2) of section 27, shall not be refunded
unless such person has, in respect of the entire period for which the certificate of registration granted to him had
remained in force, furnished all the returns required under section 39. (Advance tax to be refunded to casual
taxable or NRTP, will only be made after fillings of all pending returns)
(14) Notwithstanding anything contained in this section, no refund under sub-section (5) or sub-section (6) shall be
paid to an applicant, if the amount is less than one thousand rupees. (Refund< 1,000/- not allowed)
Explanation.—For the purposes of this section,–
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(1) “refund” includes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or
input services used in making such zero-rated supplies,orrefund of tax on the supply of goods regarded as
deemed exports, or refund of unutilised input tax credit as provided under sub-section (3).(This clarifies
that, refund is for Inputs and input services only, not for Capital goods)
(2) “relevant date” means—
(a) in the case of goodsexported out of India where a refund of tax paid is available in respect of goods
themselves or, as the case may be, the inputs or input services used in such goods,––
(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are
loaded, leaves India; or
(ii) if the goods are exported by land, the date on which such goods pass the frontier; or
(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place
outside India;
(b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in
respect of the goods, the date on which the return relating to such deemed exports is furnished;
(c) in the case of servicesexported out of India where a refund of tax paid is available in respect of services
themselves or, as the case may be, the inputs or input services used in such services, the date of––
(i) receipt of payment in convertible foreign exchange or in Indian rupees wherever permitted by the
Reserve Bank of India, where the supply of services had been completed prior to the receipt of such
payment; or
(ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue
of the invoice;
(d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of
the Appellate Authority, Appellate Tribunal or any court, the date of communication of such judgment,
decree, order or direction;
(e) in the case of refund of unutilised input tax credit under clause (ii) of the first proviso to sub-section
(3)(which is inverted duty structure), the due date for furnishing of return under section 39 for the period
in which such claim for refund arises;
(f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of
adjustment of tax after the final assessment thereof;
(g) in the case of a person, other than the supplier(Transporter, ECO), the date of receipt of goods or
services or both by such person; and
(h) inany other case, the date of payment of tax.
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Section 55 - Refund in certain cases
The Government may, on the recommendations of the Council, by notification, specify any specialised agency of
the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the
United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries and any other
person or class of persons as may be specified in this behalf, who shall, subject to such conditions and restrictions
as may be prescribed, be entitled to claim a refund of taxes paid on the notified supplies of goods or services or
both received by them.
(This section authorised such agencies to clear refund of taxes paid on inwards, although previous section
54(2) defines how to make such refund which is by application within 6 months of quarter end).
Rule 95 - Refund of tax to certain persons
(1) Any person eligible to claim refund of tax paid by him on his inward supplies as per notification issued section
55 shall apply for refund in FORM GST RFD-10 once in every quarter, electronically on the common portal or
otherwise, either directly or through a Facilitation Centre notified by the Commissioner, along with a statement of
the inward supplies of goods or services or both in FORM GSTR-11.
(2) An acknowledgement for the receipt of the application for refund shall be issued in FORM GST RFD-02.
(3) The refund of tax paid by the applicant shall be available if-
(a) the inward supplies of goods or services or both were received from a registered person against a tax invoice;
(b) name and Goods and Services Tax Identification Number or Unique Identity Number of the applicant is
mentioned in the tax invoice; and
(c) such other restrictions or conditions as may be specified in the notification are satisfied.
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Provided that where Unique Identity Number of the applicant is not mentioned in a tax invoice, the refund of tax
paid by the applicant on such invoice shall be available only if the copy of the invoice, duly attested by the
authorized representative of the applicant, is submitted along with the refund application in FORM GST RFD-10.
(4) The provisions of rule 92 shall, mutatis mutandis, apply for the sanction and payment of refund under this rule.
(5) Where an express provision in a treaty or other international agreement, to which the President or the
Government of India is a party, is inconsistent with the provisions of this Chapter, such treaty or international
agreement shall prevail.
Section 56 - Interest on delayed refunds
If any tax ordered to be refunded under sub-section (5) of section 54 to any applicant is not refunded within sixty
days from the date of receipt of application under sub- section (1) of that section, interest at such rate not exceeding
six percent as may be specified in the notification issued by the Government on the recommendations of the
Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the
date of receipt of application under the said sub-section till the date of refund of such tax:
Provided that where any claim of refund arises from an order passed by an adjudicating authority or Appellate
Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days
from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine
percent as may be notified by the Government on the recommendations of the Council shall be payable in respect
of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till
the date of refund.
Explanation.––For the purposes of this section, where any order of refund is made by an Appellate Authority,
Appellate Tribunal or any court against an order of the proper officer under sub-section (5) of section 54, the order
passed by the Appellate Authority, Appellate Tribunal or by the court shall be deemed to be an order passed under
the said sub-section (5).
Section 57 - Consumer Welfare Fund
The Governmentshallconstitute a Fund, to be called the Consumer Welfare Fund and there shall be credited to the
Fund,—
(a) theamount referred to in sub-section (5) of section 54;
(b) any income from investment of the amount credited to the Fund; and
(c) such other monies received by it, in such manner as may be prescribed.
Section 58 - Utilisation of Fund
(1) All sumscredited to the Fund shall be utilised by the Government for the welfare of the consumers in such
(2) The Government or the authority specified by it shall maintain proper and separate account and other relevant
records in relation to the Fund and prepare an annual statement of accounts in such form as may be prescribed in
consultation with the Comptroller and Auditor-General of India.
CHAPTER X of CGST Rules 2017 - REFUNDS
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Rule 89 - Application for refund of tax, interest, penalty, fees or any other amount
(1)Any person, except the persons covered under notification issued under section 55, claiming refund of any tax,
interest, penalty, fees or any other amount paid by him, other than refund of integrated tax paid on goods exported
out of India(because this IGST refund will be given by custom department, not by GST department), may file
an application electronically in FORM GST RFD-01through the common portal, either directly or through a
Facilitation Centre notified by the Commissioner:
Provided that any claim for refund relating to balance in the electronic cash ledger in accordance with the
provisions of sub-section (6) of section 49 may be made through the return furnished for the relevant tax period in
FORM GSTR-3or FORM GSTR-4or FORM GSTR-7, as the case may be:
Provided further that in respect of supplies to a Special Economic Zone unit or a Special Economic Zone
developer, the application for refund shall be filed by the –
(a) supplier of goodsafter such goods have been admitted in full in the Special Economic Zone for authorised
operations, as endorsed by the specified officer of the Zone;
(b) supplier of services along with such evidence regarding receipt of services for authorised operations as endorsed
by the specified officer of the Zone:
Provided also that in respect of supplies regarded as deemed exports, the application may be filed by, -
(a) the recipient of deemed export supplies; or
(b) the supplier of deemed export supplies in cases where the recipient does not avail of input tax credit on such
supplies and furnishes an undertaking to the effect that the supplier may claim the refund.
Provided also that refund of any amount, after adjusting the tax payable by the applicant (Casual Person and
NRTP) out of the advance tax deposited by him under section 27 at the time of registration, shall be claimed in the
last return required to be furnished by him.
(1A) Any person, claiming refund under section 77 of the Act of any tax paid by him, in respect of a transaction
considered by him to be an intra-State supply, which is subsequently held to be an inter-State supply, may, before
the expiry of a period of two years from the date of payment of the tax on the inter-State supply, file an application
electronically in FORM GST RFD-01 through the common portal, either directly or through a Facilitation Centre
notified by the Commissioner:
Provided that the said application may, as regard to any payment of tax on inter-State supply before coming into
force of this sub-rule, be filed before the expiry of a period of two years from the date on which this sub-rule comes
into force.
(2) The application under sub-rule (1) shall be accompanied by any of the following documentary evidences in
Annexure 1 in FORM GST RFD-01, as applicable, to establish that a refund is due to the applicant, namely:-
(a) the reference number of the order and a copy of the order passed by the proper officer or an appellate authority
or Appellate Tribunal or court resulting in such refund or reference number of the payment of the amount specified
in sub-section (6) of section 107 and sub-section (8) of section 112 claimed as refund;
(b) a statement containing the number and date of shipping bills or bills of export and the number and the date of
the relevant export invoices, in a case where the refund is on account of export of goods;
(c) a statement containing the number and date of invoices and the relevant Bank Realisation Certificates or
Foreign Inward Remittance Certificates, as the case may be, in a case where the refund is on account of the export
of services;
(d) a statement containing the number and date of invoices as provided in rule 46 (Rules of Tax Invoices) along
with the evidence regarding the endorsement specified in the second proviso to sub-rule (1)(evidence for
authorised operations only, as stated above) in the case of the supply of goods made to a Special Economic Zone
unit or a Special Economic Zone developer;
(e) a statement containing the number and date of invoices, the evidence regarding the endorsement specified in the
second proviso to sub-rule (1) and the details of payment, along with the proof thereof, made by the recipient to the
supplier for authorised operations as defined under the Special Economic Zone Act, 2005, in a case where the
refund is on account of supply of services made to a Special Economic Zone unit or a Special Economic Zone
developer;
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(f) a declaration to the effect that tax has not been collected from the Special Economic Zone unit or the Special
Economic Zone developer, in a case where the refund is on account of supply of goods or services or both made to
a Special Economic Zone unit or a Special Economic Zone developer;
(g) a statement containing the number and date of invoices along with such other evidence as may be notified in
this behalf, in a case where the refund is on account of deemed exports;
(h) a statement containing the number and the date of the invoices received and issued during a tax period in a case
where the claim pertains to refund of any unutilised input tax credit under sub-section (3) of section 54 where the
credit has accumulated on account of the rate of tax on the inputs being higher than the rate of tax on output
supplies, other than nil-rated or fully exempt supplies;
(i) the reference number of the final assessment order and a copy of the said order in a case where the refund arises
on account of the finalisation of provisional assessment;
(j) a statement showing the details of transactions considered as intra-State supply but which is subsequently held
to be inter-State supply; (IGST wrongly paid instead of CGST and SGST)
(k) a statement showing the details of the amount of claim on account of excess payment of tax;
(l) a declaration to the effect that the incidence of tax, interest or any other amount claimed as refund has not been
passed on to any other person, in a case where the amount of refund claimed does not exceed two lakh rupees:
Provided that a declaration is not required to be furnished in respect of the cases covered under clause (a) or clause
(b) or clause (c) or clause (d) or clause (f) of sub-section (8) of section 54;
(m) a Certificate in Annexure 2 of FORM GST RFD-01issued by a chartered accountant or a cost accountant to
the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any
other person, in a case where the amount of refund claimed exceeds two lakh rupees:
Provided that a certificate is not required to be furnished in respect of cases covered under clause (a) or clause (b)
or clause (c) or clause (d) or clause (f) of sub-section (8) of section 54;
Explanation.– For the purposes of this rule-

(i) in case of refunds referred to in clause (c) of sub-section (8) of section 54, the expression “invoice” means
invoice conforming to the provisions contained in section 31(Tax Invoice);
(ii) where the amount of tax has been recovered from the recipient, it shall be deemed that the incidence of tax has
been passed on to the ultimate consumer.
(3) Where the application relates to refund of input tax credit, the electronic credit ledger shall be debited by the
applicant by an amount equal to the refund so claimed.
(4) In the case of zero-rated supply of goods or services or both without payment of tax under bond or letter of
undertaking in accordance with the provisions of sub-section (3) of section 16 of the Integrated Goods and Services
Tax Act, 2017 (13 of 2017), refund of input tax credit shall be granted as per the following formula –
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC
Adjusted Total Turnover
Where, -
(A) "Refund amount" means the maximum refund that is admissible;
(B) "Net ITC" means input tax credit availed on inputs and input services(Refund of CG will not allowed)during
the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B)
or both;
(C) “Turnover of zero-rated supply of goods" means the value of zero-rated supply of goods made during the
relevant period without payment of tax under bond or letter of undertaking or the value which is 1.5 times the value
of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the
supplier,whichever is less, other than the turnover of supplies in respect of which refund is claimed under sub-rules
(4A) or (4B) or both;
(D) "Turnover of zero-rated supply of services" means the value of zero-rated supply of services made without
payment of tax under bond or letter of undertaking, calculated in the following manner, namely:-
Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated
supply of services and zero-rated supply of services where supply has been completed for which payment had been
received in advance in any period prior to the relevant period reduced by advances received for zero-rated supply of
services for which the supply of services has not been completed during the relevant period;
(E) “Adjusted Total Turnover” means the sum total of the value of-
(a) theturnover in a State or a Union territory, as defined under clause (112) of section 2, excluding the turnover of
services; and
(b) the turnover of zero-rated supply of services determined in terms of clause (D) above and non-zero-rated supply
of services, excluding-
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(i) the value of exempt supplies other than zero-rated supplies; and
(ii) the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B) or both, if
any,
during the relevant period.
(F) “Relevant period” means the period for which the claim has been filed.
(4A) In the case of supplies received on which the supplier has availed the benefit of the Government of India,
Ministry of Finance, notification No. 48/2017-Central Tax dated the 18th October, 2017 published in the Gazette of
India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1305 (E) dated the 18th October, 2017,
refund of input tax credit, availed in respect of other inputs or input services used in making zero-rated supply of
goods or services or both, shall be granted.
Vide notification No. 48/2017-Central Tax dated the 18th October, 2017, hereby notifies the supplies of
mentioned goods as deemed exports.
1. Supply of goods by a registered person against Advance Authorisation
2. Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation
3. Supply of goods by a registered person to Export Oriented Unit
4. Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-
Customs, dated the 30th June, 2017 (as amended) against Advance Authorisation.
(4B) where the person claiming refund of unutilised input tax credit on account of zero rated supplies
ACKNOWLEDGMENT
without
payment of tax has –
(a) received supplies on which the supplier has availed the benefit of the Government of India, Ministry of Finance,
notification No. 40/2017-Central Tax (Rate), dated the 23rd October 2017, published in the Gazette of India,
Extraordinary, Part II, Section 3, Sub-section (i),
vide number G.S.R 1320 (E), dated the 23rd October, 2017 or notification No. 41/2017-Integrated Tax (Rate),
dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i),
vide number G.S.R 1321(E), dated the 23rd October 2017; or
(b) availed the benefit of notification No. 78/2017-Customs, dated the 13th October 2017, published in the Gazette
of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1272(E), dated the 13th October
2017 or notification No. 79/2017-Customs, dated the 13th October 2017, published in the Gazette of India,
Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1299(E), dated the 13th October 2017,
the refund of input tax credit, availed in respect of inputs received under the said notifications for export of goods
and the input tax credit availed in respect of other inputs or input servicesto the extent used in making such export
of goods, shall be granted.
In these above 4 notifications, mentioned in part (a) and (b) above, Rate of tax on inwards has been concession
at a very reduce rate of 0.10 per cent (0.05+0.05), which also eligible to claim refund so that working capital
merchant export would not be blocked, of such Supplier falls under such categories then he can claim refund
under this sub-section 4B.
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(5) In the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the
following formula:-
Maximum Refund Amount = Turnover of inverted rated supply of goods andservicesxNet ITC
Adjusted Total Turnover
- Tax payable on such inverted rated supply of goods and services
Explanation:-For the purposes of this sub-rule, the expressions –

(a) “Net ITC” shall mean input tax credit availed on inputs during the relevant period other than the input tax credit
availed for which refund is claimed under sub-rules (4A) or (4B) or both; and
“Adjusted Total turnover” and “relevant period” shall have the same meaning as assigned to them in sub-rule (4).
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Rule 90 - Acknowledgement
(1) Where the application relates to a claim for refund from the electronic cash ledger, an acknowledgement in
FORM GST RFD-02shall be made available to the applicant through the common portal electronically,
clearly indicating the date of filing of the claim for refund and the time period specified in sub-section (7) of
section 54 shall be counted from such date of filing.
(2) The application for refund, other than claim for refund from electronic cash ledger (Means of E-credit Ledger),
shall be forwarded to the proper officer who shall, within a period of fifteen days of filing of the said application,
scrutinize the application for its completeness and where the application is found to be complete in terms of sub-
rule (2), (3) and (4)of rule 89, an acknowledgement in FORM GST RFD-02 shall be made available to the
applicant through the common portal electronically, clearly indicating the date of filing of the claim for refund and
the time period specified in sub-section (7) of section 54 shall be counted from such date of filing.
(3) Where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in
FORM GST RFD-03through the common portal electronically, requiring him to file a fresh refund application
after rectification of such deficiencies.
(4) Where deficiencies have been communicated in FORM GST RFD-03under the State Goods and Service Tax
Rules,2017, the same shall also deemed to have been communicated under this rule along with the deficiencies
communicated under sub-rule (3). (Deficiencies communicated under CGST, deemed to be communicated under
SGST Act also)
(5) The applicant may, at any time before issuance of provisional refund sanction order in FORM GST RFD-04 or
final refund sanction order in FORM GST RFD-06 or payment order in FORM GST RFD-05 or refund withhold
order in FORM GST RFD-07 or notice in FORM GST RFD-08, in respect of any refund application filed in FORM
GST RFD-01, withdraw the said application for refund by filing an application in FORM GST RFD-01W.
(6) On submission of application for withdrawal of refund in FORM GST RFD-01W, any amount debited by the
applicant from electronic credit ledger or electronic cash ledger, as the case may be, while filing application for
refund in FORM GST RFD-01, shall be credited back to the ledger from which such debit was made.
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Rule 91 - Grant of provisional refund
(1) The provisional refund in accordance with the provisions of sub-section (6) of section 54 shall be granted
subject to the condition that the person claiming refund has, during any period of five years immediately preceding
the tax period to which the claim for refund relates, not been prosecuted for any offence under the Act or under an
existing law where the amount of tax evaded exceeds two hundred and fifty lakh rupees.
(2) The proper officer, after scrutiny of the claim and the evidence submitted in support thereof and on being prima
facie satisfied that the amount claimed as refund under sub-rule (1) is due to the applicant in accordance with the
provisions of sub-section (6) of section 54, shall make an order in FORM GST RFD-04, sanctioning the amount of
refund due to the said applicant on a provisional basis within a period not exceeding seven days from the date of
the acknowledgement under sub-rule (1) or sub-rule (2) of rule 90:
Provided that the order issued in FORM GST RFD-04shall not be required to be revalidated by the proper officer.
(3) The proper officer shall issue a payment order in FORM GST RFD-05for the amount sanctioned under sub-
rule (2) and the same shall be electronically credited to any of the bank accounts of the applicant mentioned in his
registration particulars and as specified in the application for refund on the basis of a consolidated payment advice.
Provided that the payment order in FORM GST RFD-05shall be required to be revalidated where the refund has
not been disbursed within the same financial year in which the said payment order was issued.
(4) The Central Government shall disburse the refund based on the consolidated payment advice issued under sub-
rule (3).
Rule 92 - Order sanctioning refund
(1)Where, upon examination of the application, the proper officer is satisfied that a refund under sub-section (5) of
section 54 is due and payable to the applicant, he shall make an order in FORM GST RFD-06sanctioning the
amount of refund to which the applicant is entitled, mentioning therein the amount, if any, refunded to him on a
provisional basis under sub-section (6) of section 54, amount adjusted against any outstanding demand under the
Act or under any existing law and the balance amount refundable:
(1A)Where, upon examination of the application of refund of any amount paid as tax other than the refund of tax
paid on zero-rated supplies or deemed export, the proper officer is satisfied that a refund under sub-section (5) of
section 54 of the Act is due and payable to the applicant, he shall make an order in FORM RFD-06sanctioning the
amount of refund to be paid, in cash, proportionate to the amount debited in cash against the total amount paid for
discharging tax liability for the relevant period, mentioning therein the amount adjusted against any outstanding
demand under the Act or under any existing law and the balance amount refundable and for the remaining amount
which has been debited from the electronic credit ledger for making payment of such tax, the proper officer shall
issue FORM GST PMT-03 re-crediting the said amount as Input Tax Credit in electronic credit ledger.
(2) Where the proper officer or the Commissioner is of the opinion that the amount of refund is liable to be
withheld under the provisions of sub-section (10) or, as the case may be, sub-section (11) of section 54, he shall
pass an order in Part B of FORM GST RFD-07informing him the reasons for withholding of such refund.
Provided that where the proper officer or the Commissioner is satisfied that the refund is no longer liable to be
withheld, he may pass an order for release of withheld refund in Part B of FORM GST RFD- 07.
(3) Where the proper officer is satisfied, for reasons to be recorded in writing, that the whole or any part of the
amount claimed as refund is not admissible or is not payable to the applicant, he shall issue a notice in FORM
GST RFD-08to the applicant, requiring him to furnish a replyinform GST RFD-09within a period of fifteen days
of the receipt of such notice and after considering the reply, make an order in FORM GST RFD-06sanctioning the
amount of refund in whole or part, or rejecting the said refund claim and the said order shall be made available to
the applicant electronically and the provisions of sub-rule (1) shall, mutatis mutandis, apply to the extent refund is
allowed:
Provided that no application for refund shall be rejected without giving the applicant an opportunity of being heard.
(4) Where the proper officer is satisfied that the amount refundable under sub-rule (1) or sub-rule (1A) or sub-rule
(2) is payable to the applicant under sub-section (8) of section 54, he shall make an order in FORM GST RFD-
06and issue a payment order in FORM GST RFD-05 for the amount of refund and the same shall be electronically
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credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the
application for refund on the basis of a consolidated payment advice.
Provided that the order issued in FORM GST RFD-06shall not be required to be revalidated by the proper officer:
Provided further that the payment order in FORM GST RFD-05shall be required to be revalidated where the
refund has not been disbursed within the same financial year in which the said payment order was issued.
(4A) The Central Government shall disburse the refund based on the consolidated payment advice issued under
sub-rule (4).
(5) Where the proper officer is satisfied that the amount refundable under sub-rule (1) or sub-rule (1A) or sub-rule
(2) is not payable to the applicant under sub-section (8) of section 54, he shall make an order in FORM GST RFD-
06and issue a payment order in FORM GST RFD-05, for the amount of refund to be credited to the Consumer
Welfare Fund.
Rule 93 - Credit of the amount of rejected refund claim
(1)Where any deficiencies have been communicated under sub-rule (3) of rule 90, the amount debited under sub-
rule (3) of rule 89 shall be re-credited to the electronic credit ledger.
(2) Where any amount claimed as refund is rejected under rule 92, either fully or partly, the amount debited, to the
extent of rejection, shall be re-credited to the electronic credit ledger by an order made in FORM GST PMT-03.
Explanation.– For the purposes of this rule, a refund shall be deemed to be rejected, if the appeal is finally
rejectedor if the claimant gives an undertaking in writing to the proper officer that he shall not file an appeal.
Rule 94 - Order sanctioning interest on delayed refunds
Where any interest is due and payable to the applicant under section 56, the proper officer shall make an order
along with a payment order in FORM GST RFD-05, specifying therein the amount of refund which is delayed, the
period of delay for which interest is payable and the amount of interest payable, and such amount of interest shall
be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and
as specified in the application for refund.
Rule 95 - Refund of tax to certain persons – (Already covered above with section 55)
Rule 95A - Refund of taxes to the retail outlets established in departure area of an international Airport
beyond immigration counters making tax free supply to an outgoing international tourist
(1) Retail outlet established in departure area of an international airport, beyond the immigration counters,
supplying indigenous goods to an outgoing international touristwho is leaving India shall be eligible to claim
refund of tax paid by it on inward supply of such goods.
(2) Retail outlet claiming refund of the taxes paid on his inward supplies, shall furnish the application for refund
claim in FORM GST RFD- 10B on a monthly or quarterly basis, as the case may be, through the common portal
either directly or through a Facilitation Centre notified by the Commissioner.
(3) The self-certified compiled information of invoices issued for the supply made during the month or the quarter,
as the case may be, along with concerned purchase invoice shall be submitted along with the refund application.
(4) The refund of tax paid by the said retail outlet shall be available if-
(a) the inward supplies of goods were received by the said retail outlet from a registered person against a tax
invoice;
(b) the said goods were supplied by the said retail outlet to an outgoing international tourist against foreign
exchange without charging any tax;
(c) name and Goods and Services Tax Identification Number of the retail outlet is mentioned in the tax invoice for
the inward supply; and
(d) such other restrictions or conditions, as may be specified, are satisfied.
(5) The provisions of rule 92 shall, mutatis mutandis, apply for the sanction and payment of refund under this rule.
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Explanation.-For the purposes of this rule, the expression “outgoing international tourist” shall mean a person not
normally resident in India, who enters India for a stay of not more than six months for legitimate non-immigrant
purposes.
Rule 96 - Refund of integrated tax paid on goods or services exported out of India
(1) The shipping bill filed by an exporter of goods shall be deemed to be an application for refund of integrated tax
paid on the goods exported out of India and such application shall be deemed to have been filed only when:-
(a) the person in charge of the conveyance carrying the export goods duly files a departure manifestor an export
manifestor an export report covering the number and the date of shipping bills or bills of export; and
(b) the applicant has furnished a valid return in FORM GSTR-3orFORM GSTR-3B, as the case may be; (3B
required for payment of IGST)
(c) the applicant has undergone Aadhaar authentication in the manner provided in rule 10B.
(2) The details of the relevant export invoices in respect of export of goods contained in FORM GSTR-1shall be
transmitted electronically by the common portal to the system designated by the Customs and the said system shall
electronically transmit to the common portal, a confirmation that the goods covered by the said invoices have been
exported out of India.
Provided that where the date for furnishing the details of outward supplies in FORM GSTR-1for a tax period has
been extended in exercise of the powers conferred under section 37 of the Act, the supplier shall furnish the
information relating to exports as specified in Table 6A of FORM GSTR-1after the return in FORM GSTR-3B
has been furnished and the same shall be transmitted electronically by the common portal to the system designated
by the Customs:
Provided further that the information in Table 6A furnished under the first proviso shall be auto-drafted in FORM
GSTR-1for the said tax period.
(3) Upon the receipt of the information regarding the furnishing of a valid return in FORM GSTR-3or FORM
GSTR-3B, as the case may befrom the common portal, the system designated by the Customs or the proper officer
of Customs, as the case may be, shall process the claim of refund in respect of export of goods and an amount equal
to the integrated tax paid in respect of each shipping bill or bill of export shall be electronically credited to the bank
account of the applicant mentioned in his registration particulars and as intimated to the Customs authorities.
(4) The claim for refund shall be withheld where,-

(a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax
to withhold the payment of refund due to the person claiming refund in accordance with the provisions of sub-
section (10) or sub-section (11) of section 54; or
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(b) the proper officer of Customs determines that the goods were exported in violation of the provisions of the
Customs Act, 1962.
(5) Where refund is withheld in accordance with the provisions of clause (a) of sub-rule (4), the proper officer of
integrated tax at the Customs station shall intimate the applicant and the jurisdictional Commissioner of central tax,
State tax or Union territory tax, as the case may be, and a copy of such intimation shall be transmitted to the
common portal.
(6) Upon transmission of the intimation under sub-rule (5), the proper officer of central tax or State tax or Union
territory tax, as the case may be, shall pass an order in Part A of FORM GST RFD-07.
(7) Where the applicant becomes entitled to refund of the amount withheld under clause (a) of sub-rule (4), the
concerned jurisdictional officer of central tax, State tax or Union territory tax, as the case may be, shall proceed to
refund the amount after passing an order in FORM GST RFD-06 after passing an order for release of withheld
refund in Part B of FORM GST RFD-07.
(8) The Central Governmentmaypayrefund of the integrated tax to the Government of Bhutan on the exports to
Bhutan for such class of goods as may be notified in this behalf and where such refund is paid to the Government
of Bhutan, the exporter shall not be paid any refund of the integrated tax (if as per agreement with Bhutan, IGST
collected to be pay to Bhutan, then such refund has not been given to exporter).
(9) The application for refund of integrated tax paid on the services exported out of India shall be filed in FORM
GST RFD-01and shall be dealt with in accordance with the provisions of rule 8 via 9(because in case of services
no such transmission can be possible via custom department as in case of goods, so therefore same procedure for
claiming refund to be made via filling RFD-01 to GST department in case of export of services with payment
of IGST).
(10) The persons claiming refund of integrated tax paid on exports of goods or services should not have –
(a) received supplies on which the benefit of the Government of India, Ministry of Finance notification No.
48/2017-Central Tax, dated the 18th October, 2017, published in the Gazette of India, Extraordinary, Part II,
Section 3, Sub-section (i), vide number G.S.R 1305 (E), dated the 18th October, 2017 except so far it relates to
receipt of capital goods by such person against Export Promotion Capital Goods Scheme or notification No.
40/2017-Central Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II,
Section 3, Sub-section (i), vide number G.S.R 1320 (E), dated the 23rd October, 2017 or notification No. 41/2017-
Integrated Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II,
Section 3, Sub-section (i), vide number G.S.R 1321 (E), dated the 23rd October, 2017 has been availed; or (All
such benefits vide such notifications, we have already covered above in Rule 89 (4A), where refund can be
taken of ITC only, therefore persons availing such benefits via these notifications can only be allowed to take
ITC refund not of IGST)
(b) availed the benefit under notification No. 78/2017-Customs, dated the 13th October, 2017, published in the
Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1272(E), dated the 13th
October, 2017 or notification No. 79/2017-Customs, dated the 13th October, 2017, published in the Gazette of
India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1299 (E), dated the 13th October, 2017
except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods
Scheme.(Same reason as stated in point no (a) above)
Explanation.- For the purpose of this sub-rule, the benefit of the notifications mentioned therein shall not be
considered to have been availed only where the registered person has paidIntegrated Goods and Services Tax and
Compensation Cess on inputs and has availed exemption of only Basic Customs Duty (BCD) under the said
notifications.(means just paying of IGST on inwards and claiming exemption, is not the criteria that benefit
of notification has been availed, beyond this other conditions in the notifications is also to be fulfilled, to cover
under such benefits)
Rule 96A - Export of goods or services under bond or Letter of Undertaking
(1) Any registered person availing the option to supply goods or services for export without payment of integrated
taxshall furnish, prior to export, a bond or a Letter of Undertaking in FORM GST RFD-11 to the jurisdictional
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Commissioner, binding himself to pay the tax due along with the interest specified under sub-section (1) of section
50 within a period of — (This period is for getting LUT or furnishing bond to the department)
(a) fifteen days after the expiry of three months, or such further period as may be allowed by the
Commissioner,from the date of issue of the invoice for export, if the goods are not exported out of India(Mean’s in
case of supply to SEZ); or
(b) fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from
the date of issue of the invoice for export, if the payment of such services is not received by the exporter in
convertible foreign exchange or in Indian rupees, wherever permitted by the Reserve Bank of India.
(2) The details of the export invoices contained in FORM GSTR-1furnished on the common portal shall be
electronically transmitted to the system designated by Customs and a confirmation that the goods covered by the
said invoices have been exported out of India shall be electronically transmitted to the common portal from the said
system.
Provided that where the date for furnishing the details of outward supplies in FORM GSTR-1for a tax period has
been extended in exercise of the powers conferred under section 37 of the Act, the suppliershall furnish the
information relating to exports as specified in Table 6A of FORM GSTR-1after the return in FORM GSTR-
3Bhas been furnished and the same shall be transmitted electronically by the common portal to the system
designated by the Customs:
Provided further that the information in Table 6A furnished under the first proviso shall be auto-drafted in FORM
GSTR-1 for the said tax period.
(3) Where the goods are not exported within the time specified in sub-rule (1) and the registered person fails to pay
the amount mentioned in the said sub-rule, the export as allowed under bond or Letter of Undertaking shall be
withdrawn forthwith and the said amount shall be recovered from the registered person in accordance with the
provisions of section 79.
(4) The export as allowed under bond or Letter of Undertaking withdrawn in terms of sub-rule (3) shall be restored
immediately when the registered person pays the amount due.
(5) The Board, by way of notification, may specify the conditions and safeguards under which a Letter of
Undertaking may be furnished in place of a bond.
(6) The provisions of sub rule (1) shall apply, mutatis mutandis, in respect of zero-rated supply of goods or services
or both to a Special Economic Zone developer or a Special Economic Zone unit without payment of integrated
tax.”;
Rule 96B - Recovery of refund of unutilised input tax credit or integrated tax paid on export of goods where
export proceeds not realised
(1)Where any refund of unutilised input tax credit on account of export of goods or of integrated tax paid on export
of goods has been paid to an applicant but the sale proceeds in respect of such export goods have not been realised,
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in full or in part, in India within the period allowed under the Foreign Exchange Management Act, 1999 (42 of
1999), including any extension of such period, the person to whom the refund has been made shall deposit the
amount so refunded, to the extent of non-realisation of sale proceeds, along with applicable interest within thirty
days of the expiry of the said period or, as the case may be, the extended period, failing which the amount refunded
shall be recovered in accordance with the provisions of section 73 or 74 of the Act, as the case may be, as is
applicable for recovery of erroneous refund, along with interest under section 50:
Provided thatwhere sale proceeds, or any part thereof, in respect of such export goods are not realised by the
applicant within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), but the
Reserve Bank of India writes off the requirement of realisation of sale proceedson merits, the refund paid to the
applicant shall not be recovered.
(2) Where the sale proceeds are realised by the applicant, in full or part, after the amount of refund has been
recovered from him under sub-rule (1) and the applicant produces evidence about such realisation within a period
of three months from the date of realisation of sale proceeds, the amount so recovered shall be refunded by the
proper officer, to the applicant to the extent of realisation of sale proceeds, provided the sale proceeds have been
realised within such extended period as permitted by the Reserve Bank of India.
Rule 97 - Consumer Welfare Fund – (not to relevant for exam purposes)
Rule 97A - Manual filing and processing

Notwithstanding anything contained in this Chapter, in respect of any process or procedure prescribed herein, any
reference to electronic filing of an application, intimation, reply, declaration, statement or electronic issuance of a
notice, order or certificate on the common portal shall, in respect of that process or procedure, include manual
filing of the said application, intimation, reply, declaration, statement or issuance of the said notice, order or
certificate in such Forms as appended to these rules(Means submission of Refund forms as stated in CGST
Rules (Part-B) can also be furnish manually, instead of electronically mode).
Summary of forms we have read
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Summary of Refund
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CHAPTER XII of CGST Act 2017 - ASSESSMENT
Section 59 - Self-assessment
Every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as
specified under section 39.
Section 60 - Provisional assessment
(1) Subject to the provisions of sub-section (2), where the taxable person is unable to determine the value of goods
or services or both or determine the rate of tax applicable thereto, he may request the proper officer in writing
giving reasons for payment of tax on a provisional basis and the proper officer shall pass an order, within a period
not later than ninety days from the date of receipt of such request, allowing payment of tax on provisional basis at
such rate or on such value as may be specified by him. (If Taxable person unable to determine either correct value
or correct rate then he may request PO to make payment provisionally)
(2) The payment of tax on provisional basis may be allowed, if the taxable person executes a bond in such form as
may be prescribed, and with such surety or security as the proper officer may deem fit, binding the taxable person
for payment of the difference between the amount of tax as may be finally assessed and the amount of tax
provisionally assessed. (PO allow to make payment under execution of bond for payment of the difference, if
any)
(3) The proper officer shall, within a period not exceeding six months from the date of the communication of the
order issued under sub-section (1), pass the final assessment order after taking into account such information as
may be required for finalizing the assessment: (PO shall pass the final assessment order within 6 months)
Provided that the period specified in this sub-section may, on sufficient cause being shown and for reasons to be
recorded in writing, be extended by the Joint Commissioner or Additional Commissioner for a further period not
exceeding six months and by the Commissioner for such further period not exceeding four years.(such period of 6
months can be extended by JC/AC by further 6 months and commissioner can extend upto 4 years)
(4) The registered person shall be liable to pay interest on any tax payable on the supply of goods or services or
both under provisional assessment but not paid on the due date specified under sub-section (7) of section 39 or the
rules made there under, at the rate specified under sub-section (1) of section 50(Maximum 18%), from the first day
after the due date of payment of tax in respect of the said supply of goods or services or both till the date of actual
payment, whether such amount is paid before or after the issuance of order for final assessment.
(5) Where the registered person is entitled to a refund consequent to the order of final assessment under sub-section
(3), subject to the provisions of sub-section (8) of section 54(cases where refund given to assessee instead of
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Consumer welfare fund), interest shall be paid on such refund as provided in section 56.(Maximum 6% or 9%,as
the case may be)
Section 61 - Scrutiny of returns
(1) The proper officer may scrutinize the return and related particulars furnished by the registered person to verify
the correctness of the return and inform him of the discrepancies noticed, if any, in such manner as may be
prescribed and seek his explanation thereto.
(2) In case the explanation is found acceptable, the registered person shall be informed accordingly and no further
action shall be taken in this regard.
(3) In case no satisfactory explanation is furnished within a period of thirty days of being informed by the proper
officer or such further period as may be permitted by him or where the registered person, after accepting the
discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted,
the proper officer mayinitiate appropriate action including those under section 65 or section 66 or section
67(Related to audits by department), or proceed to determine the tax and other dues under section 73 or section
74.
Section 62 - Assessment of non-filers of returns
(1) Notwithstanding anything to the contrary contained in section 73 or section 74, where a registered personfails to
furnish the return under section 39 or section 45, even after the service of a notice under section 46, the proper
officer may proceed to assess the tax liability of the said person to the best of his judgment taking into account all
the relevant material which is available or which he has gathered and issue an assessment order within a period of
five years from the date specified under section 44 for furnishing of the annual return for the financial year to
which the tax not paid relates. (If return not filled, then PO may do Best judgment assessment and pass order
within 5 years from the date of annual return)
(2) Where the registered person furnishes a valid return within thirty days of the service of the assessment order
under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for
payment of interest under sub-section (1) of section 50 or for payment of late fee under section 47 shall continue.
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SOP for Non-Fillers of Return
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Section 63 - Assessment of unregistered persons
Notwithstanding anything to the contrary contained in section 73 or section 74, where a taxable person fails to
obtain registration even though liable to do so or whose registration has been cancelled under sub-section (2) of
section 29 but who was liable to pay tax, the proper officer may proceed to assess the tax liability of such taxable
person to the best of his judgment for the relevant tax periods and issue an assessment order within a period of five
years from the date specified under section 44 for furnishing of the annual return for the financial year to which the
tax not paid relates:
(Same as in Section 62, but here the case is when person liable for registration not taken registration or
cancelled registration then the same procedure will be followed as in section 62 where, PO may do Best
judgement assessment and pass order within 5 years from the date of annual return)
Provided that no such assessment order shall be passed without giving the person an opportunity of being heard.
Section 64 - Summary assessment in certain special cases
(1) The proper officermay, on any evidence showing a tax liability of a person coming to his notice, with the
previous permission of Additional Commissioner or Joint Commissioner, proceed to assess the tax liability of such
person to protect the interest of revenue and issue an assessment order, if he has sufficient grounds to believe that
any delay in doing so may adversely affect the interest of revenue: (If PO has evidence that someone is doing tax
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evasion and if delayed, department will be in loss, then or urgent basis on reasonable grounds he can issue
assessment order directly, without giving ROOBH)
Provided that where the taxable person to whom the liability pertains is not ascertainable and such liability pertains
to supply of goods, the person in charge of such goods shall be deemed to be the taxable person liable to be
assessed and liable to pay tax and any other amount due under this section. (If PO unable to trace actual taxable
person then Person in charge would be deemed as such taxable person and liable for the dues)
(2) On an application made by the taxable personwithin thirty days from the date of receipt of order passed under
sub-section (1) or on his own motion(self by PO), if the Additional Commissioner or Joint Commissioner
considers that such order is erroneous, he may withdraw such order and follow the procedure laid down in section
73 or section 74.(if it is not necessary to opt such immediate steps, then such order will withdraw and normal
proceeding will be initiated)
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CHAPTER XIII of CGST Act 2017 - AUDIT
Section 65 - Audit by tax authorities
(1) The Commissioner or any officer authorised by him, by way of a general or a specific order, may undertake
audit of any registered person for such period, at such frequency and in such manner as may be prescribed.
(2) The officers referred to in sub-section (1) may conduct audit at the place of business of the registered person or
in their office.
(3) The registered person shall be informed by way of a notice not less than fifteen working daysprior to the
conduct of audit in such manner as may be prescribed. (PO need to inform minimum 15 days before coming)
(4) The audit under sub-section (1) shall be completed within a period of three months from the date of
commencement of the audit: (Maximum time allowed for completing audit is 3 months)
Provided that where the Commissioner is satisfied that audit in respect of such registered person cannot be
completed within three months, he may, for the reasons to be recorded in writing, extend the period by a further
period not exceeding six months.(Commissioner may extend such period further by 6 months)
Explanation.––For the purposes of this sub-section, the expression “commencement of audit” shall mean the date
on which the records and other documents, called for by the tax authorities, are made available by the registered
person or the actual institution of audit at the place of business, whichever is later.
(5) During the course of audit, the authorised officer may require the registered person,—
(i) to afford him the necessary facility to verify the books of account or other documents as he may require;
(ii) to furnish such information as he may require and render assistance for timely completion of the audit.
(6) On conclusion of audit, the proper officer shall, within thirty days, inform the registered person, whose records
are audited, about the findings, his rights and obligations and the reasons for such findings.
(7) Where the audit conducted under sub-section (1) results in detection of tax not paid or short paid or erroneously
refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 or
section 74.
Section 66 - Special audit
(1) If at any stage of scrutiny, inquiry, investigation or any other proceedings before him, any officer not below the
rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue,
is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits,
he may, with the prior approval of the Commissioner, direct such registered person by a communication in writing
to get his records including books of account examined and audited by a chartered accountant or a cost accountant
as may be nominated by the Commissioner. (if officer think of such books need to be audited, then with prior
approval of commissioner, direct RP for get his accounts audited by CA or CWA)
(2) The chartered accountant or cost accountant so nominated shall, within the period of ninety days, submit a
report of such audit duly signed and certified by him to the said Assistant Commissioner mentioning therein such
other particulars as may be specified:
Provided that the Assistant Commissioner may, on an application made to him in this behalf by the registered
personor the chartered accountant or cost accountant or for any material and sufficient reason, extend the said
period by a further period of ninety days.
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(3) The provisions of sub-section (1) shall have effect notwithstanding that the accounts of the registered person
have been audited under any other provisions of this Act or any other law for the time being in force. (if audit
already done in this Act or any other law, then also audit need to be done)
(4) The registered person shall be given an opportunity of being heard in respect of any material gathered on the
basis of special audit under sub-section (1) which is proposed to be used in any proceedings against him under this
Act or the rules made there under.
(5) The expenses of the examination and audit of records under sub-section (1), including the remuneration of such
chartered accountant or cost accountant, shall be determined and paid by the Commissioner and such determination
shall be final.(CA/CWA fees also borne by commissioner)
(6) Where the special audit conducted under sub-section (1) results in detection of tax not paid or short paid or
erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under
section 73 or section 74.(Same as done in section 65(7), previously done)
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CHAPTER XXI of CGST Act 2017 - MISCELLANEOUS
Section 143 - Job work procedure
(1) A registered person (hereafter in this section referred to as the “principal”) may under intimation and subject to
such conditions as may be prescribed, send any inputs or capital goods, without payment of tax, to a job worker for
job work and from there subsequently send to another job worker and likewise, and shall,––
(a) bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs
and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of
business, without payment of tax;
(b) supply such inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs
and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of
business of a job worker on payment of tax within India, or with or without payment of tax for export, as the case
may be:
Provided that the principal shall not supply the goods from the place of business of a job worker in accordance with
the provisions of this clause unless the said principal declares the place of business of the job worker as his
additional place of business except in a case—
(i) where the job worker is registered under section 25; or
(ii) where the principal is engaged in the supply of such goods as may be notified by the Commissioner:
Provided further that the period of one year and three years may, on sufficient cause being shown, be extended by
the Commissioner for a further period not exceeding one year and two years respectively.
(2) The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal.
(3) Where the inputs sent for job work are not received back by the principal after completion of job work or
otherwise in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of
business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of one
year of their being sent out, it shall be deemed that such inputs had been supplied by the principal to the job worker
on the day when the said inputs were sent out.
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(4) Where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent for job work are not
received back by the principal in accordance with the provisions of clause (a) of sub-section (1) or are not supplied
from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1)
within a period of three years of their being sent out, it shall be deemed that such capital goods had been supplied
by the principal to the job worker on the day when the said capital goods were sent out.
(5) Notwithstanding anything contained in sub-sections (1) and (2), any waste and scrap generated during the job
work may be supplied by the job worker directly from his place of business on payment of tax, if such job worker
is registered, or by the principal, if the job worker is not registered.
Explanation- For the purposes of job work, input includes intermediate goods arising from any treatment or process
carried out on the inputs by the principal or the job worker.
Section 147 - Deemed exports
The Government may, on the recommendations of the Council, notify certain supplies of goods as deemed
exports, where goods supplied do not leave India, and payment for such supplies is received either in Indian
rupees or in convertible foreign exchange, if such goods are manufactured in India.
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Summary of Sections under IGST Act 2017
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MINISTRY OF LAW AND JUSTICE
(Legislative Department)
New Delhi, the 12th April, 2017/Chaitra22, 1939 (Saka) The following Act of Parliament received the assent of the
President on the 12th April, 2017, and is hereby published for general information:—
THE INTEGRATED GOODS AND SERVICES TAX ACT, 2017
[12th April, 2017]
An Act to make a provision for levy and collection of tax on inter-State supply of goods or services or both by the
Central Government and for matters connected therewith or incidental thereto.
BE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:—
CHAPTER I of IGST Act 2017 - PRELIMINARY
1. Short title, extent and commencement
(1) This Act may be called the Integrated Goods and Services Tax Act, 2017.
(2) It shall extend to the whole of India
(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette,
appoint:
Provided that different dates may be appointed for different provisions of this Act and any reference in any such
provision to the commencement of this Act shall be construed as a reference to the coming into force of that
provision.
2. Definitions
In this Act, unless the context otherwise requires,––
(1) “Central Goods and Services Tax Act” means the Central Goods and Services Tax Act, 2017;
(2) “central tax” means the tax levied and collected under the Central Goods and Services Tax Act;
(3) “continuous journey” means a journey for which a single or more than one ticket or invoice is issued at the
same time, either by a single supplier of service or through an agent acting on behalf of more than one supplier of
service, and which involves no stopover between any of the legs of the journey for which one or more separate
tickets or invoices are issued.
Explanation.––For the purposes of this clause, the term “stopover” means aplace where a passenger can disembark
either to transfer to another conveyance or break his journey for a certain period in order to resume it at a later point
of time;
(4) “customs frontiers of India” means the limits of a customs area as defined in section 2 of the Customs Act,
1962;
(5) “export of goods” with its grammatical variations and cognate expressions, means taking goods out of India to a
place outside India;
(6) “export of services” means the supply of any service when,––
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
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(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange or in
Indian rupees wherever permitted by the Reserve Bank of India; and
(v) the supplier of serviceand the recipient of service are not merely establishments of a distinct person in
accordance with Explanation 1 in section 8;
(7) “fixed establishment” means a place (other than the registered place of business) which is characterised by a
sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services
or to receive and use services for its own needs;
(8) “Goods and Services Tax (Compensation to States) Act” means the Goods and Services Tax (Compensation to
States) Act, 2017;
(9) “Government” means the Central Government;
(10) “import of goods” with its grammatical variations and cognate expressions, means bringing goods into India
from a place outside India;
(11) “import of services” means the supply of any service, where––
(i) the supplier of service is located outside India;
(ii) the recipient of service is located in India; and
(iii) the place of supply of service is in India;
(12) “integrated tax” means the integrated goods and services tax levied under this Act;
(13) “intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or
facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include
a person who supplies such goods or services or both or securities on his own account;
(14) “location of the recipient of services” means,––
(a) where a supply is received at a place of business for which the registration has been obtained, the location of
(b) where a supply is received at a place other than the place of business for which registration has been obtained (a
fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is received at more than one establishment, whether the place of business or fixed establishment,
the location of the establishment most directly concerned with the receipt of the supply; and
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(d) in absence of such places, the location of the usual place of residence of the recipient;
(15) “location of the supplier of services” means,––
(a) where a supply is made from a place of business for which the registration has been obtained, the location of
(b) where a supply is made from a place other than the place of business for which registration has been obtained (a
fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment,
the location of the establishment most directly concerned with the provision of the supply; and
(d) in absence of such places, the location of the usual place of residence of the supplier;
(16) “non-taxable online recipient”means any Government, local authority, governmental authority, an individual
or any other person not registered(recipient must be unregistered)andreceiving online information and database
access or retrieval services in relation to any purpose other than commerce, industry or any other business or
profession, located in taxable territory(unregistered recipient is in India).
Explanation.––For the purposes of this clause, the expression “governmental authority” means an authority or a
board or any other body,––
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
with ninety per cent. or more participation by way of equity or control, to carry out any function entrusted [to a
Panchayat under article 243G or]3 to a municipality under article 243W of the Constitution;
(17) “online information and database access or retrieval services”means services whose delivery is mediated by
information technology over the internet or an electronic network and the nature of which renders their supply
essentially automated and involving minimal human intervention and impossible to ensure in the absence of
information technology and includes electronic services such as,––
(i) advertising on the internet;
(ii) providing cloud services;
(iii) provision of e-books, movie, music, software and other intangibles through telecommunication networks or
internet;
(iv) providing data or information, retrievable or otherwise, to any person in electronic form through a computer
network;
(v) online supplies of digital content (movies, television shows, music and the like);
(vi) digital data storage; and
(vii) online gaming;
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(18) “output tax”, in relation to a taxable person, means the integrated tax chargeable under this Act on taxable
supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge
basis;
(19) “Special Economic Zone” shall have the same meaning as assigned to it in clause (za) of section 2 of the
Special Economic Zones Act, 2005;
(20) “Special Economic Zone developer” shall have the same meaning as assigned to it in clause (g) of section 2 of
the Special Economic Zones Act, 2005 and includes an Authority as defined in clause (d) and a Co-Developer as
defined in clause (f ) of section 2 of the said Act;
(21) “supply” shall have the same meaning as assigned to it in section 7 of the Central Goods and Services Tax
Act;
(22) “taxable territory” means the territory to which the provisions of this Act apply;
(23) “zero-rated supply” shall have the meaning assigned to it in section 16;
(24) words and expressions used and not defined in this Act but defined in the Central Goods and Services Tax Act,
the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act
shall have the same meaning as assigned to them in those Acts;
(25) any reference in this Act to a law which is not in force in the State of Jammu and Kashmir, shall, in relation to
that State be construed as a reference to the corresponding law, if any, in force in that State.
CHAPTER II of IGST Act 2017 - ADMINISTRATION
3. Appointment of Officers
The Board may appoint such central tax officers as it thinks fit for exercising the powers under this Act.
4. Authorisation of officers of State tax or Union territory tax as proper officer in certain circumstances.—
Without prejudice to the provisions of this Act, the officers appointed under the State Goods and Services Tax Act
or the Union Territory Goods and Services Tax Act are authorised to be the proper officers for the purposes of this
Act, subject to such exceptions and conditions as the Government shall, on the recommendations of the Council, by
notification, specify
CHAPTER III of IGST Act 2017 - LEVY AND COLLECTION OF TAX
5. Levy and collection (Same as section 9 of CGST Act 2017)
(1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services
tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human
consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such
rates, not exceeding forty percent, as may be notified by the Government on the recommendations of the Council
and collected in such manner as may be prescribed and shall be paid by the taxable person:
Provided that the integrated tax on goods imported into India shall be levied and collected in accordance with the
provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point
when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962.
(2) The integrated tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as
petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the
Government on the recommendations of the Council.
(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of
goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or
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services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for
paying the tax in relation to the supply of such goods or services or both.
(4) The Government may, on the recommendations of the Council, by notification, specify a class of registered
persons who shall, in respect of supply of specified categories of goods or services or both received from an
unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or
both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in
relation to such supply of goods or services or both.
(5) The Government may, on the recommendations of the Council, by notification, specify categories of services,
the tax on inter-State supplies of which shall be paid by the electronic commerce operator if such services are
supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is
the supplier liable for paying the tax in relation to the supply of such services:
Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any
person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay
tax:
Provided further that where an electronic commerce operator does not have a physical presence in the taxable
territory and also does not have a representative in the said territory, such electronic commerce operator shall
appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.
6. Power to grant Exemption from tax (Same as section 11 of CGST Act 2017)
recommendations of the Council, by notification, exempt generally, either absolutely or subject to such conditions
as may be specified therein, goods or services or both of any specified description from the whole or any part of the
tax leviable thereon with effect from such date as may be specified in such notification.
recommendations of the Council, by special order in each case, under circumstances of an exceptional nature to be
stated in such order, exempt from payment of tax any goods or services or both on which tax is leviable.
(3) The Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or
applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insertan
Explanation in such notification or order, as the case may be, by notification at any time within one year of issue of
the notification under sub-section (1) or order under sub-section (2), and every such Explanation shall have effect
as if it had always been the part of the first such notification or order, as the case may be.
Explanation.––For the purposes of this section, where an exemption in respect of any goods or services or both
from the whole or part of the tax leviable thereon has been granted absolutely, the registered person supplying such
goods or services or both shall not collect the tax, in excess of the effective rate, on such supply of goods or
services or both.
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CHAPTER IV of IGST Act 2017 - DETERMINATION OF NATURE OF SUPPLY
Section 7 - Inter-State supply
(1) Subject to the provisions of section 10(Related to POS of goods where both supplier and recipient is in India),
supply of goods, where the location of the supplier and the place of supply are in––
(a) two different States;
(b) two different Union territories; or
(c) a State and a Union territory,
shall be treated as a supply of goods in the course of inter-State trade or commerce.
(2) Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be
treated to be a supply of goods in the course of inter-State trade or commerce.
(3) Subject to the provisions of section 12(Related to POS of Services where both supplier and recipient is in
India), supply of services, where the location of the supplier and the place of supply are in––
(a) two different States;
(b) two different Union territories; or
(c) a State and a Union territory,
shall be treated as a supply of services in the course of inter-State trade or commerce.
(4) Supply of services imported into the territory of India shall be treated to be a supply of services in the course of
inter-State trade or commerce.
(5) Supply of goods or services or both,––
(a) when the supplier is located in India and the place of supply is outside India;
(b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or
(c) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be treated
to be a supply of goods or services or both in the course of inter-State trade or commerce.
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Section 8 - Intra-State supply
(1) Subject to the provisions of section 10(Related to POS of goods where both supplier and recipient is in India),
supply of goods where the location of the supplier and the place of supply of goods are in the same State or same
Union territory shall be treated as intra-State supply:
Provided that the following supply of goods shall not be treated as intra-State supply, namely:––
(i) supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit;
(ii) goods imported into the territory of India till they cross the customs frontiers of India; or
(iii) supplies made to a tourist referred to in section 15.
(2) Subject to the provisions of section 12(Related to POS of Services where both supplier and recipient is in
India), supply of services where the location of the supplier and the place of supply of services are in the same
State or same Union territory shall be treated as intra-State supply:
Provided that the intra-State supply of services shall not include supply of services to or by a Special Economic
Zone developer or a Special Economic Zone unit.
Explanation 1.––For the purposes of this Act, where a person has,––
(i) an establishment in India and any other establishment outside India;
(ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory;
or
(iii) an establishment in a State or Union territory and any other establishment registered within that State or Union
territory, then such establishments shall be treated as establishments of distinct persons.
Explanation 2.––A person carrying on a business through a branch or an agency or a representational office in any
territory shall be treated as having an establishment in that territory.
Section 9 - Supplies in territorial waters
Notwithstanding anything contained in this Act,––
(a) where the location of the supplier is in the territorial waters, the location of such supplier; or
(b) where the place of supply is in the territorial waters, the place of supply, shall, for the purposes of this Act, be
deemed to be in the coastal State or Union territory where the nearest point of the appropriate baseline is located.
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CHAPTER V of IGST Act 2017 - PLACE OF SUPPLY
Section 10 - Place of supply of goods other than supply of goods imported into, or exported from India
(1) The place of supply of goods, other than supply of goods imported into, or exported from India(As this import
and export of goods covers under section 11), shall be as under,––
(a) where the supply involves movement of goods, whether by the supplier or the recipient or by any other person,
the place of supply of such goods shall be the location of the goods at the time at which the movement of goods
terminates for delivery to the recipient;
(b) where the goods are delivered by the supplier to a recipient(Ship to) or any other person on the direction of a
third person(Bill to), whether acting as an agent or otherwise, before or during movement of goods, either by way
of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received
the goods(Bill to)and the place of supply of such goods shall be the principal place of business of such person;
(c) where the supply does not involve movement of goods, whether by the supplier or the recipient, the place of
supply shall be the location of such goods at the time of the delivery to the recipient;
(d) where the goods are assembled or installed at site, the place of supply shall be the place of such installation or
assembly;
(e) where the goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle,
the place of supply shall be the location at which such goods are taken on board(Starting point of departure).
(2) Where the place of supply of goods cannot be determined, the place of supply shall be determined in such
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Section 11 - Place of supply of goods imported into, or exported from India
The place of supply of goods,––
(a) imported into India shall be the location of the importer; (Importer can avail ITC on that)
(b) exported from India shall be the location outside India.(Exports are Zero-rated, therefore no GST impact)
Section 12 - Place of supply of services where location of supplier and recipient is in India
(1) The provisions of this section shall apply to determine the place of supply of services where the location of
supplier of services and the location of the recipient of services is in India.
(2) The place of supply of services, except the services specified in sub-sections (3) to (14),––
(a) made to a registered person shall be the location of such person;
(b) made to any person other than a registered person shall be,––
(i) the location of the recipient where the address on record exists; and
(ii) the location of the supplier of services in other cases.
(3) The place of supply of services,––
(a) directly in relation to an immovable property, including services provided by architects, interior decorators,
surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use
immovable property or for carrying out or co-ordination of construction work; or
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(b) by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name
called, and including a house boat or any other vessel; or
(c) by way of accommodation in any immovable property for organising any marriage or reception or matters
related thereto, official, social, cultural, religious or business function including services provided in relation to
such function at such property; or
(d) any services ancillary to the services referred to in clauses (a), (b) and (c), shall be the location at which the
immovable property or boat or vessel, as the case may be, is located or intended to be located:
Provided that if the location of the immovable property or boat or vessel is located or intended to be located outside
India, the place of supply shall be the location of the recipient.
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Explanation.––Where the immovable property or boat or vessel is located in more than one State or Union
territory, the supply of services shall be treated as made in each of the respective States or Union territories, in
proportion to the value for services separately collected or determined in terms of the contract or agreement entered
into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.
(4) The place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment, health
service including cosmetic and plastic surgery shall be the location where the services are actually performed.
(5) The place of supply of services in relation to training and performance appraisal to,––
(a) a registered person, shall be the location of such person;
(b) a person other than a registered person, shall be the location where the services are actually performed.
(6) The place of supply of services provided by way of admission to a cultural, artistic, sporting, scientific,
educational, entertainment event or amusement park or any other place and services ancillary thereto, shall be the
place where the event is actually held or where the park or such other place is located.
(7) The place of supply of services provided by way of,—
(a) organisation of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of
services in relation to a conference, fair, exhibition, celebration or similar events; or
(b) services ancillary to organisation of any of the events or services referred to in clause (a), or assigning of
sponsorship to such events,––
(i) to a registered person, shall be the location of such person;
(ii) to a person other than a registered person, shall be the place where the event is actually held and if the event is
held outside India, the place of supply shall be the location of the recipient.
Explanation.––Where the event is held in more than one State or Union territory and a consolidated amount is
charged for supply of services relating to such event, the place of supply of such services shall be taken as being in
each of the respective States or Union territories in proportion to the value for services separately collected or
determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or
agreement, on such other basis as may be prescribed.
(8) The place of supply of services by way of transportation of goods, including by mail or courier to,––
(b) a person other than a registered person, shall be the location at which such goods are handed over for their
transportation.
Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of
destination of such goods.
(9) The place of supply of passenger transportation service to,—
(b) a person other than a registered person, shall be the place where the passenger embarks on the conveyance for a
continuous journey:
Provided that where the right to passage is given for future use and the point of embarkation is not knownat the
time of issue of right to passage, the place of supply of such service shall be determined in accordance with the
provisions of sub-section (2). (For example – movement of Delhi metro is between Gurgaon-Delhi-Noida but at
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the time of when the metro card is recharged point of embarkation is not known for future use, so in that case,
POS will be that state from where metro card recharge has been done)
Explanation.––For the purposes of this sub-section, the return journey shall be treated as a separate journey, even if
the right to passage for onward and return journey is issued at the same time[Mean’s return of Delhi to Mumbai
and return ticket also booked at the same time, then POS for the journey Delhi to Mumbai is Delhi (point of
embarkation) and for return journey Mumbai to Delhi, POS for the journey is Mumbai (point of
embarkation), as both journey are considered as separate journey].
(10) The place of supply of services on board a conveyance, including a vessel, an aircraft, a train or a motor
vehicle, shall be the location of the first scheduled point of departure of that conveyance for the journey. (Mean’s
cold drink supply in between the flight journey from Delhi to Maharashtra, POS will be Delhi, as flight started
from Delhi)
(11) The place of supply of telecommunication services including data transfer, broadcasting, cable and direct to
home television services to any person shall,—
(a) in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish
antenna, be the location where the telecommunication line, leased circuit or cable connection or dish antenna is
installed for receipt of services;
(b) in case of mobile connection for telecommunication and internet services provided on post-paid basis, be the
location of billing address of the recipient of services on the record of the supplier of services;
(c) in cases where mobile connection for telecommunication, internet service and direct to home television services
are provided on pre-payment basis through a voucher or any other means,––
(i) through a selling agent or a re-seller or a distributor of subscriber identity module card or re-charge voucher, be
the address of the selling agent or re-seller or distributor as per the record of the supplier(Airtel, Vodafone etc.) at
the time of supply; or
(ii) byany person(Tata Sky) to the final subscriber(user), be the location where such prepayment is received or
such vouchers are sold;
(d) in other cases, be the address of the recipient as per the records of the supplier of services and where such
address is not available, the place of supply shall be location of the supplier of services:
Provided that where the address of the recipient as per the records of the supplier of services is not available, the
place of supply shall be location of the supplier of services:
Provided further that if such pre-paid service is availed or the recharge is made through internet banking or other
electronic mode of payment, the location of the recipient of services on the record of the supplier of services shall
be the place of supply of such services.
Explanation.––Where the leased circuit is installed in more than one State or Union territory and a consolidated
amount is charged for supply of services relating to such circuit, the place of supply of such services shall be taken
as being in each of the respective States or Union territoriesin proportion to the value for services separately
collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such
contract or agreement, on such other basis as may be prescribed.
(12) The place of supply of banking and other financial services, including stock broking services to any person
shall be the location of the recipient of services on the records of the supplier of services:
Provided that if the location of recipient of services is not on the records of the supplier, the place of supply shall be
the location of the supplier of services.
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(13) The place of supply of insurance services shall,––
(a) to a registered person, be the location of such person;
(b) to a person other than a registered person, be the location of the recipient of services on the records of the
supplier of services.
(14) The place of supply of advertisement services to the Central Government, a State Government, a statutory
body or a local authority meant for the States or Union territories identified in the contract or agreement shall be
taken as being in each of such States or Union territories and the value of such supplies specific to each State or
Union territory shall be in proportion to the amount attributable to services provided by way of dissemination in the
respective States or Union territories as may be determined in terms of the contract or agreement entered into in
this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed. (Like –
election promotion done on various TV / radio channels by various nominated parties of Government, then in
such a case, POS for those service will be allocated to each state on the basis of number of ad’s done in respective
states)
Section 13 - Place of supply of services where location of supplier or location of recipient is outside India
(1) The provisions of this section shall apply to determine the place of supply of services where the location of the
supplier of services or the location of the recipient of services is outside India.
(2) The place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of
the recipient of services:
Provided that where the location of the recipient of services is not available in the ordinary course of business, the
place of supply shall be the location of the supplier of services.
(3) The place of supply of the following services shall be the location where the services are actually performed,
namely:—
(a) services suppliedin respect of goods which are required to be made physically available by the recipient of
services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the
services:
Provided that when such services are provided from a remote location by way of electronic means, the place of
supply shall be the location where goods are situated at the time of supply of services:
Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods
which are temporarily imported into India for repairs or for any other treatment or process and are exported after
such repairs or treatment or process without being put to any use in India, other than that which is required for such
repairs or treatment or process;
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(b) services supplied to an individual, represented either as the recipient of services or a person acting on behalf of
the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the
supplier for the supply of services.
(4) The place of supply of services supplied directly in relation to an immovable property, including services
supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or
campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or co-
ordination of construction work, including that of architects or interior decorators, shall be the placewhere the
immovable property is located or intended to be located.
(5) The place of supply of services supplied by way of admission to, ororganisation of a cultural, artistic, sporting,
scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of
services ancillary to such admission or organisation, shall be the place where the event is actually held.
(6) Where any services referred to in sub-section (3) or sub-section (4) or sub-section (5) is supplied at more than
one location, including a location in the taxable territory, its place of supply shall be the location in the taxable
territory.
(7) Where the services referred to in sub-section (3) or sub-section (4) or sub-section (5) are supplied in more than
one State or Union territory, the place of supply of such services shall be taken as being in each of the respective
States or Union territories and the value of such supplies specific to each State or Union territory shall be in
proportion to the value for services separately collected or determined in terms of the contract or agreement entered
into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed.
(8) The place of supply of the following services shall be the location of the supplier of services, namely:––
(a) services supplied by a banking company, or a financial institution, or a non-banking financial company,
toaccount holders;
(b) intermediary services;
(c) services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a
period of one month.
Explanation.–– For the purposes of this sub-section, the expression,––
(a) “account” means an account bearing interest to the depositor, and includes a non-resident external account and a
non-resident ordinary account;
(b) “banking company” shall have the same meaning as assigned to it under clause (a) of section 45A of the
Reserve Bank of India Act, 1934;
(c) “financial institution” shall have the same meaning as assigned to it in clause (c) of section 45-I of the Reserve
Bank of India Act, 1934;
(d) “non-banking financial company” means,––
(i) a financial institution which is a company;
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(ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits,
under any scheme or arrangement or in any other manner, or lending in any manner; or
(iii) such other non-banking institution or class of such institutions, as the Reserve Bank of India may, with the
previous approval of the Central Government and by notification in the Official Gazette, specify.
(9) The place of supply of services of transportation of goods, other than by way of mail or courier, shall be the
place of destination of such goods.
(10) The place of supply in respect of passenger transportation services shall be the place where the passenger
embarks on the conveyance for a continuous journey[Mean’s Ticket booked of Mumbai to London and return
ticket also booked at the same time, then POS for the journey is Mumbai (point of embarkation), as both
journey are considered as continuous journey].
(11) The place of supply of services provided on board a conveyance during the course of a passenger transport
operation, including services intended to be wholly or substantially consumed while on board, shall be the first
scheduled point of departure of that conveyance for the journey (Mean’s cold drink supply in between the flight
journey from Mumbai to USA, POS will be Mumbai, as flight started from Mumbai).
(12) The place of supply of online information and database access or retrieval services(OIDAR Services) shall be
the location of the recipient of services.
Explanation.––For the purposes of this sub-section, person receiving such services shall be deemed to be located in
the taxable territory, if any two of the following non-contradictory conditions are satisfied, namely:––
(a) the location of address presented by the recipient of services through internet is in the taxable territory;
(b) the credit card or debit card or store value card or charge card or smart card or any other card by which the
recipient of services settles payment has been issued in the taxable territory;
(c) the billing address of the recipient of services is in the taxable territory;
(d) the internet protocol address of the device used by the recipient of services is in the taxable territory;
(e) the bank of the recipient of services in which the account used for payment is maintained is in the taxable
territory;
(f) the country code of the subscriber identity module card used by the recipient of services is of taxable territory;
(g) the location of the fixed land line through which the service is received by the recipient is in the taxable
territory.
(13) In order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application of
rules, the Government shall have the power to notify any description of services or circumstances in which the
place of supply shall be the place of effective use and enjoyment of a service.
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Section 14 - Special provision for payment of tax by a supplier of online information and database access or
retrieval services
(1) On supply of online information and database access or retrieval services byany person located in a non-taxable
territory and received by a non-taxable online recipient, the supplier of services located in a non-taxable territory
shall be the person liable for paying integrated taxon such supply of services: (Mean’s service provider outside
India providing OIDAR services to a unregistered person in India, then in that case such service provider
outside India, need registration in India and to pay IGST on such services as a service provider, this case will
not fall under RCM)
Provided that in the case of supply of online information and database access or retrieval services by any person
located in a non-taxable territory and received by a non-taxable online recipient, an intermediary located in the non-
taxable territory, who arranges or facilitates the supply of such services, shall be deemed to be the recipient of such
services from the supplier of services in non-taxable territory and supplying such services to the non-taxable online
recipient except when such intermediary satisfies the following conditions, namely:––
(a) the invoice or customer‘s bill or receipt issued or made available by such intermediary taking part in the supply
clearly identifies the service in question and its supplier in non-taxable territory(Import of OIDAR services by
unregistered person);
(b) the intermediary involved in the supply does not authorise the charge to the customer or take part in its charge
which is that the intermediary neither collects or processes payment in any manner nor is responsible for the
payment between the non-taxable online recipient and the supplier of such services;
(c) thei ntermediary involved in the supply does not authorise delivery; and
(d) the general terms and conditions of the supply are not set by the intermediary involved in the supply but by the
supplier of services. (Actual foreign supplier of OIDAR services will make all Term and Conditions, not
intermediary)
(2) The supplier of online information and database access or retrieval services referred to in sub-section (1) shall,
for payment of integrated tax, take a single registration under the Simplified Registration Scheme to be notified by
the Government:
Provided thatany person located in the taxable territory representing such supplier for any purpose in the taxable
territory shall get registered and pay integrated tax on behalf of the supplier:
Provided further that if such supplier does not have a physical presence or does not have a representative for any
purpose in the taxable territory, he may appoint a person in the taxable territory for the purpose of paying integrated
tax and such person shall be liable for payment of such tax.
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CHAPTER VI of IGST Act 2017 - REFUND OF INTEGRATED TAX TO INTERNATIONAL TOURIST
Section 15 - Refund of integrated tax paid on supply of goods to tourist leaving India
The integrated tax paid by tourist leaving India on any supply of goods taken out of India by him shall be refunded
in such manner and subject to such conditions and safeguards as may be prescribed.
Explanation- For the purposes of this section, the term “tourist” means a person not normally resident in India, who
enters India for a stay of not more than six months for legitimate non-immigrant purposes.
CHAPTER VII of IGST Act 2017 - ZERO RATED SUPPLY
Section 16 - Zero rated supply
(1) “zero rated supply” means any of the following supplies of goods or services or both, namely:––
(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special Economic Zone developeror a Special Economic Zone unit.
(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act,credit of
input tax may be availed for making zero-rated supplies,notwithstanding that such supply may be an exempt
supply.
(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following
options, namely:––
(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions,
safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised
input tax credit; or
(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be
prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in
accordance with the provisions of section 54 of the Central Goods and Services Tax Actor the rules made there
under.
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CHAPTER VIII of IGST Act 2017 - APPORTIONMENT OF TAX AND SETTLEMENT OF FUNDS
17. Apportionment of tax and settlement of funds
(1) Out of the integrated tax paid to the Central Government,––
(a) in respect of inter-State supply of goods or services or both to an unregistered person or to a registered person
paying tax under section 10 of the Central Goods and Services Tax Act;
(b) In respect of inter-State supply of goods or services or both where the registered person is not eligible for input
tax credit;
(c) in respect of inter-State supply of goods or services or both made in a financial year to a registered person,
where he does not avail of the input tax credit within the specified period and thus remains in the integrated tax
account after expiry of the due date for furnishing of annual return for such year in which the supply was made;
(d) in respect of import of goods or services or both by an unregistered person or by a registered person paying tax
under section 10 of the Central Goods and Services Tax Act;
(e) In respect of import of goods or services or both where the registered person is not eligible for input tax credit;
(f) in respect of import of goods or services or both made in a financial year by a registered person, where he does
not avail of the said credit within the specified period and thus remains in the integrated tax account after expiry of
the due date for furnishing of annual return for such year in which the supply was received,
The amount of tax calculated at the rate equivalent to the central tax on similar intra-State supply shall be
apportioned to the Central Government.
(2) The balance amount of integrated tax remaining in the integrated tax account in respect of the supply for which
an apportionment to the Central Government has been done under sub-section (1) shall be apportioned to the,––
(a) State where such supply takes place; and
(b) Central Government where such supply takes place in a Union territory:
Provided that where the place of such supply made by any taxable person cannot be determined separately, the said
balance amount shall be apportioned to,––
(a) Each of the States; and
(b) Central Government in relation to Union territories,
in proportion to the total supplies made by such taxable person to each of such States or Union territories, as the
case may be, in a financial year:
Provided further that where the taxable person making such supplies is not identifiable, the said balance amount
shall be apportioned to all States and the Central Government in proportion to the amount collected as State tax or,
as the case may be, Union territory tax, by the respective State or, as the case may be, by the Central Government
during the immediately preceding financial year.
(2A). The amount not apportioned under sub-section (1) and sub-section (2) may, for the time being, on the
recommendations of the Council, be apportioned at the rate of fifty per cent. to the Central Government and fifty
per cent. to the State Governments or the Union territories, as the case may be, on ad hoc basis and shall be
adjusted against the amount apportioned under the said sub-sections.
(3) The provisions of sub-sections (1) and (2) relating to apportionment of integrated tax shall, mutatis mutandis,
apply to the apportionment of interest, penalty and compounding amount realised in connection with the tax so
apportioned.
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(4) Where an amount has been apportioned to the Central Government or a State Government under sub-section (1)
or sub-section (2) or sub-section (3), the amount collected as integrated tax shall stand reduced by an amount equal
to the amount so apportioned and the Central Government shall transfer to the central tax account or Union territory
tax account, an amount equal to the respective amounts apportioned to the Central Government and shall transfer to
the State tax account of the respective States an amount equal to the amount apportioned to that State, in such
manner and within such time as may be prescribed.
(5) Any integrated tax apportioned to a State or, as the case may be, to the Central Government on account of a
Union territory, if subsequently found to be refundable to any person and refunded to such person, shall be reduced
from the amount to be apportioned under this section, to such State, or Central Government on account of such
Union territory, in such manner and within such time as may be prescribed.
17A. Transfer of Certain Amounts- Where any amount has been transferred from the electronic cash ledger
under this Act to the electronic cash ledger under the State Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act, the Government shall transfer to the State tax account or the Union territory tax
account, an amount equal to the amount transferred from the electronic cash ledger, in such manner and within such
time, as may be prescribed.
18. Transfer of input tax credit
On utilization of credit of integrated tax availed under this Act for payment of,––
(a) central tax in accordance with the provisions of sub-section (5) of section 49 of the Central Goods and Services
Tax Act, the amount collected as integrated tax shall stand reduced by an amount equal to the credit so utilized and
the Central Government shall transfer an amount equal to the amount so reduced from the integrated tax account to
the central tax account in such manner and within such time as may be prescribed;
(b) Union territory tax in accordance with the provisions of section 9 of the Union Territory Goods and Services
Tax Act, the amount collected as integrated tax shall stand reduced by an amount equal to the credit so utilized and
the Central Government shall
Transfer an amount equal to the amount so reduced from the integrated tax account to the Union territory tax
account in such manner and within such time as may be prescribed;
(c) State tax in accordance with the provisions of the respective State Goods and Services Tax Act, the amount
collected as integrated tax shall stand reduced by an amount equal to the credit so utilized and shall be apportioned
to the appropriate State Government and the Central Government shall transfer the amount so apportioned to the
account of the appropriate State Government in such manner and within such time as may be prescribed.
Explanation.––For the purposes of this Chapter, “appropriate State” in relation to a taxable person, means the State
or Union territory where he is registered or is liable to be registered under the provisions of the Central Goods and
Services Tax Act.
19. Tax wrongfully collected and paid to Central Government or State Government.–
(1) A registered person who has paid integrated tax on a supply considered by him to be an inter-State supply, but
which is subsequently held to be an intra-State supply, shall be granted refund of the amount of integrated tax so
paid in such manner and subject to such conditions as may be prescribed.
(2) A registered person who has paid central tax and State tax or Union territory tax, as the case may be, on a
transaction considered by him to be an intra-State supply, but which is subsequently held to be an inter-State
supply, shall not be required to pay any interest on the amount of integrated tax payable.
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CHAPTER IX of IGST Act 2017 - MISCELLANEOUS
Section 20 - Application of provisions of Central Goods and Services Tax Act
Subject to the provisions of this Act and the rules made thereunder, the provisions of Central Goods and Services
Tax Act relating to,––
(i) Scope of supply;
(ii) composite supply and mixed supply;
(iii) time and value of supply;
(iv) input tax credit;
(v) registration;
(vi) tax invoice, credit and debit notes;
(vii) accounts and records;
(viii) returns, other than late fee;
(ix) payment of tax;
(x) tax deduction at source;
(xi) collection of tax at source;
(xii) assessment;
(xiii) refunds;
(xiv) audit;
(xv) inspection, search, seizure and arrest;
(xvi) demands and recovery;
(xvii) liability to pay in certain cases;
(xviii) advance ruling;
(xix) appeals and revision;
(xx) presumption as to documents;
(xxi) offences and penalties;
(xxii) job work;
(xxiii) electronic commerce;
(xxiv) transitional provisions; and
(xxv) miscellaneous provisions including the provisions relating to the imposition of interest and penalty,
shall, mutatis mutandis,apply, so far as may be, in relation to integrated tax as they apply in relation to central tax
as if they are enacted under this Act:
Provided that in the case of tax deducted at source, the deductor shall deduct tax at the rate of two per cent. from
the payment made or credited to the supplier:
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Provided further that in the case of tax collected at source, the operator shall collect tax at such rate not exceeding
two per cent, as may be notified on there commendations of the Council, of the net value of taxable supplies:
Provided also that for the purposes of this Act, the value of a supply shall include any taxes, duties, cesses, fees and
charges levied under any law for the time being in force other than this Act, and the Goods and Services Tax
(Compensation to States) Act, if charged separately by the supplier:
Provided also that in cases where the penalty is leviable under the Central Goods and Services Tax Act and the
State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, the penalty leviable under
this Act shall be the sum total of the said penalties.
Provided also that where the appeal is to be filed before the Appellate Authority or the Appellate Tribunal, the
maximum amount payable shall be fifty crore rupees and one hundred crore rupees respectively.
CA Mohit Punetha

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GST Marathon 2022 1

HISTORY OF TAXATION IN INDIA

Context of differentiation Direct tax Indirect tax

An indirect tax is levied on goods and

Taxpayers pay it directly to the Taxpayers pay it to the government

Paying entity Individuals and businesses End-consumers

Transferability of payment Cannot be transferred. Transferable

1. GST eliminates the cascading effect of tax

Before GST regime

2. Higher threshold for registration

Tax Threshold Limits

3. Composition scheme for small businesses

4. Simple and easy online procedure

5. The number of compliances is lesser

5. Defined treatment for E-commerce operators

6. Improved efficiency of logistics

7. Unorganized sector is regulated under GST

1. Increased costs due to software purchase

2. Not being GST-compliant can attract penalties

3. GST will mean an increase in operational costs

4. GST came into effect in the middle of the financial year

5. Adapting to a complete online taxation system

6. SMEs will have a higher tax burden

In 2004strongly recommended fully integrated ‘GST’ on national basis.

Introduction of GST in India

Taxes Subsumed under GST

At the Central level, the following taxes are being subsumed:

At the State level, the following taxes are being subsumed:

Dual GST model

● State GST-Collected by the State Government CGST

GST – in Union Territories without Legislature:

The following are Union Territories without Legislature:

Revenue sharing methodology of GST

• It is a not for profit, non-Government, private limited company incorporated in 2013.

Summary of whole chapter

1. Ancient history of tax structure in Manu Smriti and Arthasastra

The Constitution (One Hundred and First Amendment) Act, 2016

[8th September, 2016.]

An Act further to amend the Constitution of India.

Article 248. Residuary powers of legislation

Section 8 (Not relevant)

Section 9.(Most important)

In article 270 of the Constitution,

the Union Finance Minister........................ Chairperson;

the Union Minister of State in charge of Revenue or Finance.................

any defect in the appointment of a person as a Member of the Council; or

between the Government of India and one or more States; or

between two or more States,

arising out of the recommendations of the Council or implementation thereof.''.

In article 286 of the Constitution,—

(i) in clause (1),—

(iii) clause (3) shall be omitted.

In article 366 of the Constitution,—

'(26A) "Services" means anything other than goods;

279A includes a Union territory with Legislature;'.

Section 16 (not too relevant)

In the Sixth Schedule to the Constitution, in paragraph 8, in sub-paragraph (3),—

"(e) taxes on entertainment and amusements.".